Question

Question 5 (1 point) In a marketing class a student was giving a presentation on the importance of price in marketing decisions. Which of the following statements made by the student is NOT correct? The price decision of one product can affect how much customers purchase of other products." "While the price decision is important it is also a decision that may take the marketer a long time to change once it is set." The marketer must be careful not to set price too low as the company could potentially lose out on profits from customers willing to pay more." Many customers draw their initial perception of a product by first seeing the price."

Answer 1

We can see that option A which says that the price decision of one product can affect how much customers purchase of other products is correct as if the price set is very high and there is a substitute good available in the market , the people would prefer to buy the other good as the people would get a similar utility at a lesser price.

Option C which says that the marketer must be careful not to set price too low as the company could potentially lose out on the profits from customers willing to pay more is also true. If a company charges very low price, the company will be able to increase the demand for its goods but it will not be able to generate sufficient profits in order to run the company. So the company should always look to charge a equilibrium price in which it neither looses out it’s maximum customers and also gets to earn a sufficient profit.

Option D which says that many customers draw their initial perception of a product by first seeing the price is also true. Many peopleare concerned about the price of the product first so that they can decide whether they can afford it or not. If the price of the good is very high , then no matter what the features the good may have, many people would not even care to know about the details of the product and will go for a cheaper substitute. In the same way , if the price set is very low , people may have an initial perception that the quality of product is cheap. This will again lead to less demand for the good.

Option B which says that the it may take the marketer a long time to change the price ince it’s set is false. The marketer can change the price of the product anytime according to the economic senario and also due to any change in the cost of production of the good. The companies also change the prices of the good by giving discounts in order to increase the demand for their goods in a particular season.

So option B is the incorrect statement made by the student.