The practice of selling below cost, with an intention to destroying the competitor is referred to as :
Predatory pricing
Option 2 — Predatory pricing is correct.
Predatory pricing is the deliberate setting of prices below cost with the specific aim of driving competitors out of the market. Once rivals are eliminated and the firm gains dominance, it typically raises prices to recoup the earlier losses. Because it harms competition, predatory pricing is an abuse of dominance prohibited under competition law (in India, the Competition Act, 2002).
Why the other options are wrong:
| Term | Meaning |
|---|---|
| Loss-leader pricing | Pricing a few items very low to pull customers into the store, hoping they buy other profitable goods — not aimed at destroying rivals |
| Price discrimination | Charging different buyers different prices for the same product |
| Penetration pricing | Setting a low launch price to gain rapid market share and adoption, not to bankrupt competitors |
Takeaway: Selling below cost with intent to destroy the competitor is predatory pricing.
Similar Questions
Find the most appropriate sequence of life-cycle of price for a product, from the initial stage to the mature stage.
After determining its pricing objectives, what is the next logical step a company should take in setting its pricing policy ?
Cost - Plus pricing is not suitable for :
Match the items of List - I with that of List - II and suggest the correct code :
List - I (Pricing Strategies) List - II (Explanations) (a) Customary pricing (i) Ending a price with 99 paise (b) Skimming (ii) pricing a product based on perceived expectations of customers (c) Penetration pricing (iii) Setting a high price which gradually reduces as competitors enter the market (d) Psychological pricing (iv) Offering at a low price for a new product during its initial offering Code :
Find the most appropriate sequence of life-cycle of price for a product, from the initial stage to the mature stage.
The practice of selling below cost, with an intention to destroying the competitor is referred to as:
After determining its pricing objectives, what is the next logical step a company should take in setting its pricing policy?
When the Companies pay less attention to its own costs or demands and bases its price largely on competitors’ prices, then it is known as :
Match the items of the List-I with those of the List-II and suggest the correct code from the following:
List-I List-II i. Loss Leader a. Locational price differentials ii. Unchanged Pricing b. Products with high initial demands iii. Basing Point Pricing c. Product line pricing iv. Skimming Pricing d. Oligopoly pricing Codes:
Which one of the following will be the appropriate pricing strategy for a new product expecting an expanding market?
Important Questions from Pricing decisions
Pricing practice of setting a price target and then developing a product that would allow the firm to maximise total profit at that price is called:
- Which of the following are the informal pricing methods ?
I. Cost plus
II. Competitive
III. Rate of return
IV. Trial and error
Codes : Which among the following is not an internal factor in pricing decisions?
Find the most appropriate sequence of life-cycle of price for a product, from the initial stage to the mature stage.
After determining its pricing objectives, what is the next logical step a company should take in setting its pricing policy ?
