Question

In: Accounting

When we set a primary goal of market penetration, we employ all the following techniques EXCEPT?...

When we set a primary goal of market penetration, we employ all the following techniques EXCEPT?

Discouraging competition entry

Earning Return on Investment Quickly

Penetrating the Market

Lowering the Unit Price

Solutions

Expert Solution

Correct answer is "Earning Return on Investment quickly".

When we set a primary goal of market penetration, we employ all the following techniques EXCEPT?

"Earning Return on Investment Quickly"

In the new product or market, return on investment cannot be earned quickly, firstly company has to gain the market share by lowering its price and cost and after that it achieves breakeven point then after profit comes.

Explanation: Market penetration strategy is the strategy to tap a new segment or to enter into a new market with a new product for gaining higher market share. These are the market penetration strategies:

  1. Discouraging competition entry- Company should lower its variable cost and keep the price low so as to discourage the entry of competitors.
  2. Penetrating the Market- Company should try to penetrate the whole market so as to gain the higher market share.
  3. Lowering the Unit Price- Company has to keep its price of product as low as possible in the beginning.

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