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Enterprise Marketing — Entrepreneurship STD 12 Commerce — Question

CBSE BoardEnglish MediumSTD 12 CommerceEntrepreneurshipEnterprise Marketing5 Marks
Question
Mention the disadvantages of penetrating pricing method.
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Answer

Following are the disadvantages of penetrating pricing method:
  1. This method is applicable only to the products and services, which have high price elasticity. Thus it is not applicable to all the products.
  2. Profit margin is low in the price fixed by such method. This profit may not be sufficiently compared to the cost of production and promotion.
  3. Turnover of the enterprise increases tremendously. Such enterprises have to prepare themselves for a situation of more financial requirements.

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