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What kind of industry or product fits a survival marketing objective for pricing?  Why?

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pumamom | Valedictorian

Posted June 21, 2012 at 1:46 PM via web

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What kind of industry or product fits a survival marketing objective for pricing?  Why?

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justaguide | College Teacher | (Level 2) Distinguished Educator

Posted June 21, 2012 at 2:24 PM (Answer #1)

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A company in a an industry where a lot of competition exists and the large number of options available for buyers makes the price elasticity of demand very high would have to adopt a survival pricing objective. This requires the company to keep margins low and prices close to levels that just cover the fixed and variable costs of the products being sold.

For example, a company selling pizzas has to face a lot of competition. In order to survive, especially in the period just after entry, prices would have to be maintained at levels that allow for survival. As the company gains more customers and is able to find ways to differentiate its products from that of the competition it can increase prices with a reduced chance of demand dropping drastically if that is done.

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