Sjcam used a penetration pricing strategy to introduce its Legend action camera to compete with the latest GoPro offering. Which of the following conditions would argue for using a penetration pricing strategy when introducing this new camera?a. A large potential market exists, even at a high price.
b. Technological problems still exist for competitors, prohibiting their entry into the market for at least six months.
c. Increasing volume substantially reduces production costs.
d. Consumers perceive a price-quality relationship.
e. The product is relatively price insensitive

a. A large potential market exists, even at a high price.

Explanation:

Penetration pricing is often used to support the launch of a new product, and works best when a product enters a market with relatively little product differentiation and where demand is price elastic – so a lower price than rival products is a competitive weapon.

Therefore the conditions that would argue for using a penetration pricing strategy when introducing this new camera, is when a large potential market exists, even at a high price.so that using a lower price will attract customers to the new product and part of the potential market will be gained.

in 2001, dell computer became the world’s largest personal computer vendor, continuing to

gain market share and post profits in an industry struggling with slumping sales and billions of

dollars in losses. dell sells 90% of its pcs directly to the final customer, largely bypassing the

reseller channel that accounts for most of the world’s pc sales. this direct customer relationship

is the key to dell’s business model, and provides distinct advantages over the indirect sales

model. dell’s direct relationship with the customer allows it to tailor its offerings to customer

needs, offer add-on products and services, and use the internet to offer a variety of customer

services. in addition, dell’s pcs are built to customers’ specifications upon receipt of an order,

giving dell additional advantages over indirect pc vendors who must try to forecast demand and

ship products based on those forecasts. dell’s direct sales and build-to-order model has achieved

superior performance in the pc industry in terms of inventory turnover, reduced overhead, cash

conversion, and return on investment (kraemer, et al., 2000).

explanation:

1. c

2. b

3. a

4. c

5. a

6. b

7. c

8. c

9.b

10. d

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