Author Question: The most important trade-off in logistics is between: a. Warehousing and packaging b. Inventory and ... (Read 56 times)

penza · **on:** Jun 28, 2018

The most important trade-off in logistics is between:
a. Warehousing and packaging
b. Inventory and packaging
c. Transportation and warehousing
d. Transportation and inventory

Question 2

Explain the difference between skimming and pricing for market penetration.

mrphibs · **Reply #1 on:** Jun 28, 2018

Answer to Question 1

d

Answer to Question 2

Two contrasting strategies are referred to as pricing for market penetration or skimming. If you want to disperse your brand quickly and widely throughout the marketplace, that is, penetrate the market, the brand would be priced low at the time of its introduction to stimulate sales and to encourage trial and word of mouth. This approach is intended to capture a large market share. It is a little risky because, if many customers immediately start buying your brand, you better be ready. The product better be good (no beta testing, thank you), and your production capacity and your channels better be ready to serve. With time, the price is usually raised. As the brand reaches maturity and finds its segments, the product is adorned with more features that customers care about, etc.
In contrast, market skimming is a strategy where a high price is set because the company is seeking profit margin, not volume. The only customers who will buy this brand at a high price are the ones who really want it. Think of your digit-head friends who want the latest in software or hardware and who are willing to pay (a lot) for it. Think of the authors you like so much that you buy their new books in hardback, rather than waiting a few months for the lower-priced paperback or e-book to come out. Over time, the price is usually lowered to make the brand accessible to more customer segments.