Frank's Fabrics has a large inventory of fabric for home crafters and seamstresses but carries very few craft supplies and is finding it difficult to compete with the large chain fabric stores as a result.In order to bring more customers into the store,Frank lowers the price of fabric below his cost for a month,hoping that once customers come to his store,they will return.This is called ___ pricing.
A) survival
B) competitive
C) profit maximization
D) investment

Question

Quizplus · Accepted Answer

Survival pricing is a strategy used by businesses when they are facing intense competition and are at risk of going out of business. In this case, Frank's Fabrics is finding it difficult to compete with larger chain stores and is risking losing customers. By lowering the price of fabric below his cost, Frank is hoping to attract more customers and increase his sales. This strategy is not focused on maximizing profit, but rather on keeping the business afloat.

Frank's Fabrics Has a Large Inventory of Fabric for Home