Question

Penetration pricing is the practice of setting a relatively low price to induce greater adoption by consumers and, thus, gain greater market share” (Douglas, 2012). Utilizing a penetration pricing strategy would be more beneficial given the exposure it would provide to the new product. In comparison, I further believe that Vicks NyQuil is more of a recommended brand in households during the cold and flu season, so introducing Alka-Seltzer Plus at a lower price and more symptom relief will have great market attention for the product and brand. In the short run, the brand will garnish the attention needed in the market, and the ability to increase profitability in the long run.

Give opinion

Answer 1

Introduction

The ultimate goal of each producer in the market is to allow for increased profits. The end goal of producers is profit maximization, for which they use various pricing strategies to allow them for increased sales and overall growth. Some companies prefer selling premium products because of their Brand value in the market whereas others require a penetrative strategy which is selling lower than competitors and allowing higher profits as you go on gaining brand recognition and value.

Case Specifics: -

In the current case, penetration pricing is described, which is a model in which, companies sell at a relatively cheaper price and this allows them to get into the market and see more demand for their new product offerings.

As far as the company Vicks is concerned, going in for this strategy would be highly recommended. The current market type is such that the pharmaceutical industry is clogged with too many sellers of similar products. To allow for higher sales and brand recognition, a lower cost model strategy such as penetration pricing for Alka Seltzer Plus which is a medicine for allergy and sinus relief. It would be helpful to have a low-cost model as this is purchased by masses and lower costs would mean increased sales and overall profits in comparison to existing companies in the market.

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