Imagine you work for the manufacturer of a skateboard company. You’ve created a demand schedule and have done a great deal of pricing research. You’re excited to work with a large distributor and are trying to come up with a manufacturing price to charge them for the skateboards and avoid common problems when selling through channel intermediaries. Which of the following is the ideal strategy to adopt?

Question 1

1 / 1 point

Offer a quantity discount so the distributor is incentivized to sell more skateboards.

Divert some of the skateboards to a third party distributor.

Set the manufacturing price where the profit channel is maximized and split the profit with the distributor.

Offer a discount to the distributor and chalk the loss up to the marketing department.

Manufacturers often try to resolve the problem of double marginalization by offering quantity discounts.