22. When setting a price level policy, a good marketing manager knows that:
a)
she can easily raise prices if its initial price is too low.
Of course not, increasing prices is generally difficult and in some cases
is only allowed, from a legal point of view, if cost increases justify
it.
b)
there may be little pricing choice in markets which are close to pure competition.
In
theory, prices are set by the market in pure competition, i.e. it is really
the intersection of demand and supply (e.g. company stocks on the exchange).
When we are talking finished goods or services, competition and customers'
demands usually dictate the price. So indeed, there is little room for
choosing the right price.
c)
a "skimming" price may lead to low profits if demand is very elastic.
This
is not relevant, since the price is set at the beginning; presumably, a
good manager (like you) will have determined what the demand will be. If
demand appears to be elastic, then profits might be larger with a lower
price, i.e. a penetration strategy. Therefore, this answer doesn't make
sense.
d)
introductory price dealing usually does not increase sales.
If this were true, then I think many companies would have abandoned the
idea long ago.
e)
a penetration price makes the most sense when there is a large "elite"
market.
Of course, you know that it is a skimming price that makes sense when there
is a large elite market.