Question

Name and describe two broad new product pricing strategies and discuss when each is appropriate. Cite examples in your response.?

Answer 1

Following are the name of two broad new product pricing strategy-----------

1. Market-skimming pricing------------this pricing strategy means that seeting a high price for new product to skim maximum revennues layer by layer from the segments willing to pay the higher price. the company make fewer but more profitable sale.

This is appropriate when-----

1. competitiors are not able to enter the market easily and undercut the high price.

2. the product quality and image supports its higher price and enough buyers want the product at that price.

3. the cost of producing smaller volume is not so high that they cancel the advantages of charging more.

Market - penetration pricing-----------this means that setting a low price for a new product in order to attract a large number of buyers and market share.

this is appropriate when-----

1. the market is highly price sensitive so that alow price produces a more market growth.