Author Question: Evelyn would like to open a small business that is categorized as a being in the distribution ... (Read 24 times)

savannahhooper · **on:** Jul 14, 2018

Evelyn would like to open a small business that is categorized as a being in the distribution industry. To do this she could open a ______ establishment.
A) retail, wholesale, transportation, or communications
B) distribution or manufacturing
C) production, service, or manufacturing
D) retail, wholesale, or manufacturing

Question 2

Describe the difference between penetration pricing and skimming pricing. Give an example of each to illustrate your answer.

carlsona147 · **Reply #1 on:** Jul 14, 2018

Answer to Question 1

A

Answer to Question 2

Penetration pricing is a strategy for pricing new products. This strategy aims to capture as much of the market as possible through rock-bottom prices. Each individual sale typically yields a tiny profit; the real money comes from the sheer volume of sales. A key benefit of this strategy is that it tends to discourage competitors, who may be scared off by the slim margins. But penetration pricing only makes sense in categories that don't have a significant group of consumers who would be willing to pay a premium price. An example would be JetBlue Airlines.
Skimming pricing is a strategy for pricing new products. This pricing strategy is a subset of prestige pricing. Skimming pricing involves offering new products at a premium price. The idea is to entice price-insensitive consumers-music fanatics, for example-to buy high when a product first enters the market. Once these customers have made their purchases, marketers will often introduce lower-priced versions of the same product to capture the bottom of the market. Apple, for example, used this strategy with its iPod.