For the following two statements of Assertion (A) and Reasoning (R) indicate the correct code : Assertion (A) : Low initial pricing for new products is regarded as the principal instrument for entering into mass markets. Reasoning (R) : Firms generally go for production of new products with excess capacity initially. Codes :
Analysis of Assertion (A)
Assertion (A) states that low initial pricing for new products is a primary tool for entering mass markets. This strategy, known as penetration pricing, is indeed widely used. Its goal is to attract a large volume of customers quickly, gain significant market share, and establish a strong market presence, making it a principal instrument for mass market entry.
Therefore, Assertion (A) is correct.
Analysis of Reasoning (R)
Reasoning (R) suggests that firms often produce new products with excess capacity initially. This allows them to scale production efficiently if demand surges, minimizes the risk of stockouts, and can help keep per-unit production costs lower, especially when implementing a low-price strategy.
Therefore, Reasoning (R) is correct.
Relationship Between Assertion (A) and Reasoning (R)
While producing with excess capacity (R) can support a low-price strategy (A) by managing costs and ensuring supply for high volume, it does not fully explain *why* low pricing itself is the principal instrument for mass market entry. The decision to use low initial pricing is driven primarily by market penetration goals, customer acquisition, and competitive dynamics, rather than solely by the availability of excess capacity. Excess capacity is a supporting operational factor, not the fundamental strategic reason.
Thus, both statements are correct, but (R) does not offer the complete explanation for (A).
Conclusion
Based on the analysis:
- Assertion (A) is correct.
- Reasoning (R) is correct.
- Reasoning (R) does not fully explain Assertion (A).
This corresponds to Code 1.
Important Questions from Pricing Strategies
Indicate the correct code for the points taken into consideration for product line pricing from the following:
(i) Demand relationships of different products
(ii) Competitive situation in the product market
(iii) Advertising endeavours for different products
(iv) Cost estimates for various products
Choose the correct answer from the code given below:
Pricing strategies include
In pricing one new emerging model is Outcome Based Pricing Model. When pricing is done for the IT industry., which of these will represent Outcome Based Pricing?
In principle, all goods and services are valued at _______, that is, inclusive of all taxes.
Arrange the following steps in logical sequence of operation of the Arbitrage Pricing Theory (APT).
(A) Estimate the Factor Sensitivities
(B) Estimate the Risk Premium for Factor(s)
(C) Identify the Macroeconomic Factors
Choose the correct answer from the options given below:
