Strategic Thinking for NPD Assessment
Module 1 • 10 Questions
Question 1 of 10
0 of 10 answered
A consumer electronics firm is debating whether to lower the cost of its flagship laptop by 15%. The CFO argues that 'the firm should drop price first and lower cost later through operational efficiency.' Under the cost-vs-price framework explained in the module, why is this strategy structurally risky?
A
Lower prices automatically destroy customer willingness to pay across all segments, so the firm would only generate red-ocean competition.
B
Cost has a hard lower limit set by manufacturing realities, while price is a customer-determined variable. Cutting price before reducing cost erodes margins permanently, since cost may not fall enough to compensate.
C
Customers always interpret price drops as a signal of higher value, so revenue growth is guaranteed before cost reduction.
D
Cost and price are mathematically identical in equilibrium markets, so the order of adjustment is irrelevant.