A new company has set its main priority as gaining market share. How is this likely to affect their prices?
A.
Market share has nothing to do with changing prices.
B.
They will set extra high prices but then often run good sales.
C.
They will likely lower prices somewhat to attract customers.
D.
They will spend heavily on advertising, so they will have to charge higher prices to cover those extra expenses.
C.
They will likely lower prices somewhat to attract customers.
The correct answer is C. They will likely lower prices somewhat to attract customers.
When a company focuses on gaining market share as its main priority, it typically aims to capture a larger portion of the market by attracting more customers. One effective strategy to achieve this is lowering prices to make their products or services more affordable and appealing to potential buyers. By reducing their prices, the company can gain a competitive advantage over their rivals, encourage more customers to try their products, and potentially increase their market share in the long run.
To arrive at this answer, we can consider the basic principles of supply and demand. When prices are lowered, assuming all other factors remain constant, the demand for the company's products or services is likely to increase. This can result in a larger customer base, which aligns with their goal of gaining market share.
While choice A may seem plausible at first, it is important to recognize that changing prices can indeed have an impact on market share. Additionally, choices B and D are less likely because high prices or higher prices due to advertising expenses may deter potential customers, making it more challenging for the company to gain market share.
Remember, the correct answer was C. They will likely lower prices somewhat to attract customers.
C.
They will likely lower prices somewhat to attract customers.