The correct option for the pricing policy adopted by the producers of Product X is B. market penetration. Explanation of the Correct Answer Market Penetration Pricing is a strategy where a product is introduced at a low price to attract customers and gain market share quickly. In this case, Product X is priced at N4.00, which is lower than the competing products priced at N4.50. The cost of producing Product X is N3.90, which means the producers are selling it at a small profit margin.

1. Attracting Customers: By setting a price lower than competitors, the producers of Product X aim to attract price-sensitive customers who may be hesitant to pay more for similar products. This strategy is particularly effective in markets where consumers are looking for the best deal.
2. Building Market Share: The goal of market penetration is to quickly build a customer base and increase market share. Once the product has established a foothold in the market, the producers may consider raising the price later on.
3. Cost Consideration: The cost of production (N3.90) is close to the selling price (N4.00), indicating that the producers are willing to accept a lower profit margin initially to gain market presence.

Why the Other Options are Incorrect A. Market Skimming: This strategy involves setting a high price initially and then gradually lowering it over time. This is not applicable here because Product X is priced lower than its competitors, not higher. Market skimming is typically used for innovative products where the initial high price targets consumers willing to pay more for new technology or features. C. Product Live Promotion: This option does not refer to a pricing strategy. Instead, it suggests promotional activities to increase product awareness and sales. While promotions can accompany any pricing strategy, they are not a pricing policy in themselves. D. Above the Market Pricing: This strategy involves setting prices higher than competitors to position the product as a premium offering. Since Product X is priced lower than the competing products, this option is clearly incorrect. Summary of Key Points

• Market Penetration Pricing is used to attract customers by setting a low initial price.
• Product X is priced at N4.00, lower than competitors at N4.50, indicating a strategy to gain market share.
• The cost of production (N3.90) shows a willingness to accept lower profit margins initially.
• Other options like market skimming and above-market pricing do not apply in this scenario.

Revision Summary

• Market penetration pricing aims to quickly gain market share by setting lower prices.
• Product X's price is strategically lower than competitors to attract customers.
• The cost of production is close to the selling price, indicating a focus on volume sales.
• Understanding different pricing strategies helps in identifying the correct approach in various market scenarios.