Question

Part A

What are some examples that you have experienced in relation to one or more of the pricing models/tactics?

Part B

Why might penetration pricing potentially negatively impact brand image and product positioning in the long run? Given this risk, why would a marketing manager use penetration pricing? Identify a brand (other than the examples in the chapter) that you believe is engaged in penetration pricing.

Answer 1

Answer A

In regards to Pricing at Premium, a buddy of mine from India asked me to buy for him an iPhone 7 plus when it just recently got in the marketplaces as the cost of the exact same was extremely high in his nation. I got a minimal advantage for him in placing an order for his phone however understood that the price is way too high for the item. In regards to Pricing for market penetration, the HP Printer that I purchased when it was brand-new to the marketplace has purchased the rate which was practically 25-30% lower than what it's existing rates in the market is. They had decreased the initial costs of the item for participating in the marketplace deeply and then notoriously raised the costs of the very same over a time period. In regards to economy pricing, I truly find the generic food brand names like ready-to-eat cereals, following the idea well. The rates are reasonable all round the year. When I purchased Sony Play Station 3, I understood that for an ingenious electronic product like this, the method followed was Price skimming. Yes, I was definitely prepared to pay a greater cost for this Play Station because no other product was anywhere near to this. In terms of Psychological rates, Flash sales in my neighborhood had always the charm to grab my attention. The costs are also so lovely that it invariably makes it alluring for me to at least go for it when or to give it a look. Package rates are really economical in my pockets when I go out with my friends to Mc Donald's. The combo provides make the items more budget-friendly to me than it would have otherwise if purchased separately.

Answer B

Penetration Pricing can be used to:
Enter a brand-new market/ as a newbie in the existing market, can be a Go-to-market method
Customers at first might not have product info/ understanding, thus might not be ready to pay a premium/ moderate cost
Even a brand-new item/ service requires to be evaluated well on dependability/ sturdiness/ price/ quality/ competitiveness in the market among the range of it's segmented and targeted consumers.
Penetration prices need to also not be used in the long run:

When item sell gets some rate in some time, cost should be ultimately increased in a good manner to keep customers interested and engaged with your Brand
Continuing Low/ penetration rates for many years may make customers feel low about quality/ need/ durability/ worth of one's items/ service, and thus lower the understanding of the brand image in one's mind, leading to lower brand name equity in the market.
It could impact a business's Profit margins in the long run, plus inflation expenses could hinder more.