Which of the following statement is true?

Answer & explanation

Correct answer: option 4

The correct answer is Option (4) → If the pricing objective of a firm is “obtaining market share leadership, it will keep the price of its products at lower levels.

Option (1) If the pricing objective of a firm is ‘attaining product quality leadership’, normally lower prices are charged. — Incorrect. A firm that wants to be known for the best quality normally charges higher prices. The higher price covers the cost of high quality and of research and development.
Option (2) Companies use Public Regulation tools specifically designed to promote to customers only, e.g. free samples, discounts, and contests. — Incorrect. Free samples, discounts and contests are sales promotion tools. They are short-term incentives that push customers to buy. There is no promotion tool called public regulation.
Option (3) If a firm decides to maximize profits in the long run, it would tend to charge maximum price for its products. — Incorrect. The maximum price is charged to earn the most profit in the short run. To earn the most profit in the long run, a firm keeps a lower price per unit. It then captures a larger share of the market and earns more through bigger sales.
Option (4) If the pricing objective of a firm is “obtaining market share leadership, it will keep the price of its products at lower levels. — Correct. A firm that wants a larger share of the market keeps its prices low. A low price attracts more buyers.

NCERT (2026-27 Edition): “Obtaining Market Share Leadership: If a firms objective is to obtain larger share of the market; it will keep the price of its products at lower levels so that greater number of people are attracted to purchase the products;
(b) Surviving in a Competitive Market: If a firm is facing difficulties in surviving in the market because of intense competition or introduction of a more efficient substitute by a competitor, it may resort to discounting its products or running a promotion campaign to liquidate its stock; and
(c) Attaining Product Quality Leadership: In this case, normally higher prices are charged to cover high quality and high cost of research and Development.”