Question

Accent Software faces the following conditions. All of these support Accent’s use of a market-penetration pricing strategy EXCEPT ________. Select one: a. the market is highly price sensitive b. production and distribution costs will fall as sales volume increases c. the product’s quality and image support a high price d. a low price would help keep out the competition e. a low price might be a good way to get increased market share

Answer 1

The answer is option C:The product’s quality and image support a high price

No,it is not true because customers are so wise towards pricing policy of products and also market penetration pricing focuses on even selling quality products at lower price in order to capture the high market share.

Explanation for Why Not A, B,D, and E.

Option A: The market is highly price sensitive

• Under market penetration strategy the main objective of a company is to secure a large share of the market by deliberately setting the low prices.

Option B: production and distribution costs will fall as sales volume increases

• Because when sales volume increases then companies earn more profit as it is successful to establish its product and hence able to serve products at lower price which is the main motive of price penetration.
• Also in market penetration objective,the unit cost of production and distribution will decrease the volume of sales attain a particular target.

Option D: A low price would help keep out the competition

• Customers are aware about the price of products and get attracted towards company product's which have lower price.Lower price helps to beat the rival products as well as to hold the customers and thus helps to keep out the competition.

Option E: A low price might be a good way to get increased market share

• In a highly price sensitive market, the businessman tries to sell his product even without profit or at a lower price because he is interested in growth rather than making a profit. The lower price enables the company to penetrate the market and capture large market share.