Competitive Marketing Strategy Question:

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Like Amazon.com and egg, the Internet bank, most e-commerce operations offer prices well below those in the high street or mall and are making huge losses. What are the Internet businesses hoping to achieve with their aggressive pricing and is their price advantage likely to be maintained? Which of the following statements are correct and relevant to this pricing strategy?

Competitive Strategy Interview Question
Competitive Strategy Interview Question

Answer:

1. Start-up costs, which involve heavy promotion in conventional media, are likely to depress profits for the first ten years.
2. Internet companies are hoping to achieve economies of scale, since the marginal cost of an increase in business is small.
3. All of the above
4. None of the above

Answer: All of the above

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Marketers would use which pricing strategy to overcome a competitor that they felt did not have sufficient resources to sustain a price war.Define a penetration pricing strategy.