Read the following passage carefully and answer the given questions.
A new company is thinking of launching its product in an already established industry, but before that, the company wants to test the acceptance of the product in the market. Thus, the company decided to distribute free samples and collect responses about the product from the consumers. On analyisng the data received from the sampled consumers, the following observations were noted:
1. The company charges low prices compared to their competitors in the market. This is done by the company to capture market share.
2. The company should use impersonal forms of communication to reach more audiences.
3. The company must focus on adopting a three-level channel of distribution.
4. Concrete steps must be taken to monitor the image of the company in the eyes of the public.
"The company charges low prices compared to their competitors in the market. This is done by the company to capture market share."
Identify the pricing objective adopted by the company in the aforesaid statement.
Answer & explanation
Correct answer: option 2
The correct answer is Option (2) → Obtaining market share leadership
Option (1) Attaining product quality leadership — Incorrect. A firm aiming at quality leadership charges higher prices to cover high quality and research costs. This company charges low prices.
Option (2) Obtaining market share leadership — Correct. The passage says the company charges low prices “to capture market share”. When a firm wants a larger share of the market, it keeps its prices low. Then more people are attracted to buy its products.
Option (3) Surviving in the competitive market — Incorrect. A firm cuts prices to survive when it faces very strong competition. The passage gives a different reason: to capture market share.
Option (4) Attaining large scale production leadership — Incorrect. This is not one of the usual pricing objectives. The passage also says nothing about the scale of production.
NCERT (2026-27 Edition): “Pricing Objectives: … Apart from profit maximisation, the pricing objectives of a firm may include:” “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;” “Attaining Product Quality Leadership: In this case, normally higher prices are charged to cover high quality and high cost of research and Development.” |