Different brands within a company's product line generally have different profit margins; higher price lines have higher profit margins.For example,Nike Variety tennis shoes have variable costs of $6 and sell for $24; whereas,Nike Wimbledon tennis shoes have variable costs of $10 and sell for $48.It must be true that:
A)demand is unrelated to price.
B)Nike is using a cost-plus percentage-of-cost pricing strategy.
C)Nike is using a price lining strategy.
D)demand is unrelated to product quality.

Question

Quizplus · Accepted Answer

The fact that Nike has different product lines at different price points suggests that they are using a price lining strategy. This strategy involves offering similar products at different price points to appeal to different segments of the market. The higher price lines generally have higher profit margins, which is also consistent with the information given about the different profit margins for the Nike Variety and Wimbledon tennis shoes. The other options are not supported by the information given.

Different Brands Within a Company's Product Line Generally Have Different