Prices goods to cover variable costs and some fixed costs

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Reference no: EM132173898

1. Maverick Systems Inc. is a leading company in the mobile phone market, and profits from its mobile phones are very high. Maverick Systems has developed a new generation of smartphones, which is better than its existing line of smartphones, and has decided to embrace cannibalization of its existing line of smartphones. This means that the company is going to:

use up most of its financial resources in promoting the new phone.

introduce the new technology right away and increase its market lead while taking away profits from its existing line of smartphones.

delay introduction of the next generation product until profits have begun to significantly decrease for the existing line of smartphones.

wait for the existing line of smartphones to become obsolete and then introduce the new generation of smartphones into the market.

2. A(n) ________ price strategy is a short-run strategy that prices goods to cover variable costs and some fixed costs, and it is used by firms in industries plagued with intense price competition.

survival

market skimming

economy

penetration

3. When Sports 360, a sports bar in New York, saw yet another sports bar open up across the street, it knew that it would have to lower its price again to stay in business. The city already had too many sports bars, and Sports 360 intended on being one of those left after the inevitable shake out. In this situation, the best pricing strategy for Sports 360 would be:

a freemium program.

premium pricing.

survival pricing.

market skimming.

4. The Rocketingbusiness.com Web site offers large volumes of business research information for no cost. If a user is interested in more comprehensive information and business consultation, the site offers these services for a premium fee. This is typically an example of ________ pricing model.

penetration

freemium

survival

market skimming

Reference no: EM132173898

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