When setting a price level policy, a good marketing manager knows that:
A) introductory price dealing usually does not increase sales.
B) a penetration price makes the most sense when there is a large "elite" market.
C) a "skimming" price may lead to low profits if demand is very elastic.
D) it's easy to raise prices if the initial price is too low.
E) None of these alternatives is correct.

Question

Quizplus · Accepted Answer

Introductory price dealing often increases sales by attracting customers to try a new product. A penetration pricing strategy is most effective in markets with a large potential base of customers, not just an "elite" market, as it aims to attract a large number of customers quickly with low prices. A "skimming" price strategy, which involves setting high initial prices, can actually lead to high profits in the case of inelastic demand, not low profits. It is generally difficult to raise prices once a product is introduced at a low price because customers may resist the price increase, expecting the product to remain at the lower price point.

When Setting a Price Level Policy, a Good Marketing Manager