Question

Which of the followinDiffusion Research Company specializes in conducting market research for various firms. When it receives a new research proposal, its management first estimates the cost of conducting the research and delivering the final research report. The management then attempts to reduce the costs through efficient operations. In this scenario, Diffusion Research Company has a _____ pricing objective. is a limitation of break-even analysis?

Answer 1

Answer: Profit oriented

Explanation: Profit orientated strategies aims to set prices that will earn the company a profit. Companies do this by setting a price that is higher than the cost of goods or services they sell, and selling it at this price to customers. In this way they earn a profit on each sale that they make.

In this case Diffusion Research company first estimates the cost of conducting and delivering the research and then uses efficient operations to lower these costs. Operational efficiency entails delivering quality goods or services to consumers in the most cost effective way, and in this way maximising the profits earned on these goods and services. This indicates that a profit orientated pricing objective is used.