Multiple choice

A company engaged in producing tooth-paste intends to raise its profits by enhancing its unit sales. While its customer base is stagnant, the average customer buys around twelve units of product per year. It is planning to achieve its objective by increasing the number of promotional pricing events to one every three months. Which of the following, if it is a realistic possibility, casts the most serious doubt on the viability of the company's plan?

  1. New production capacity would not be required if the company achieves an increase in its unit sales.

  2. Pre-purchased stock of the tooth-paste would be high just before onset of promotional pricing events.

  3. The competitors of the company would match its promotional pricing, and its customers would learn to wait for these events to buy their wares.

  4. New flavors and variants would increase customers' interest in the product, but the customers' requirements for older flavors and variants would not be reduced.

Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

The company seeks to enhance its sales by increasing the number of promotional pricing events. If its competitors start matching that and its customers start waiting for those events to buy, any chance of increase in sales is completely negated. Hence (3)