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The Price of Fashion Read the mini-case and answer the questions that follow. Suppose a young socialite walks down Manhattan's Fifth Avenue wearing a $5,000 silk scarf by Herms (a French design house) that perfectly complements the $20 peek-a-boo tank top she purchased at Zara. Style is no longer dictated by price. Price skimming designers are successful, but so are stores using a market penetration pricing strategy. The stores using market penetration pricing carefully observe the styles and trends of the designer brands and then quickly and efficiently turn out similar lines in their own stores at an affordable price. Sometimes they are even able to beat the designers' fashions to the stores. To combat these stores! lower-priced but stylish clothing, high-end designers enhance their accessories and clothing with details that cannot be duplicated at a low cost. For example, they use alligator skin, mink, and fine hand stitching. I Both the affordable clothes of stores like H&M and Zara and the expensive, extravagant lines of Herms and Chanel sell well. The masses can afford H&M and Zara, and those who value the detail and cutting- edge designs from designers like Chanel are willing to pay the price. 1. High-end stores such as Chanel use price skimming for all the following reasons except which? N e select select Their customers want the latest styles as 2 soon as they come out. Their customers like costly details that are not easily imitated Their customers make decisions based on convenience and practicality Their customers are not price-sensitive. 3. Their customers are interested in the status igh prices afforded by names like Chanel willing to www of 1 206 PM 2. Why do companies such as H&M and Zara use penetration pricing? select select Their customers are willing to pay more for 3. Etheir products. high prices - willing to Their competitors are unable to enter the market easily They can build profits quickly. They cannot satisfy a rapid rise in demand. They can raise prices over time. ALAPA 3. Based on Chanel may set high prices for its winter coats because its customers are willing to pay more for a product that will last a lifetime. select e reldhove select high/low pricing 4. the cost of ownership method tthe improvement value method any Feveryday low pricing ners value versatility the competitor-based pricing method amers have purchased elsewhere. Which method is Zara using to determine pricing in this scenario? 4. Suppose Zara wants to know how much more consumers are willing to pay for its clothing line relative to other comparable clothing stores. The company performs research to determine how its customers value Zara's clothing in terms of quality, style, and versatility compared with similar clothing that the customers have purchased elsewhere. Which method is Zara using to determine pricing in this scenario? select select Reference pricing Improvement value method (High/low pricing Everyday low pricing Cost of ownership method ind in and sale b select 5. Suppose Zara features in its advertisements and in signs around the store both the original prices and sale prices of certain items. This is an example of select