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Eduncle posted an MCQ
October 15, 2019 • 15:42 pm 0 points
  • UGC NET
  • Management

Statement (I) : A low market-penetration index indicates substantial growth potential for all the firms.

Statement (I) : A low market-penetration index indicates substantial growth potential for all the firms. Statement (II) : Generally, price competition increases and margins fall when the market - penetration index is already high.

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    Eduncle Best Answer

    Both the Statements are correct
    Market penetration is a measure of the amount of sales or adoption of a product or service compared to the total theoretical market for that product or service. In addition, market penetration can also include the activities that are used to increase the market share of a particular product or service.
    Market-penetration index is a comparison of the current level of market demand to the potential demand level.
    Statement I: A low market penetration index shows that business is currently not reached to the major segment of market and can have high potential to reach to increase the revenue.
    Statement II: High Market penetration index shows that business has already reached to the market and competitors also have good market reaches causing increase in price competition to attract market which results in less margin profit.

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