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P. 1
1-7-2004

1-7-2004

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Published by ALI

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Categories:Types, Business/Law
Published by: ALI on Mar 12, 2011
Copyright:Attribution Non-commercial

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12/30/2011

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PRICING STRATEGIES
 
Pricing strategies usually change as the product passesthrough its life cycle
NEW PRODUCT
PRICING STRATEGIES
Two broad categories -
Skimming
and
Penetration
MARKET SKIMMING PRICING
Setting a high price for a new product to skim maximum revenuelayer by layer, from the segments willing to pay high price, thecompany makes fewer but more profitable sales.
Product quality and image must support high priceCost of production of smaller lot must not be that high that it eats high priceDifficult for competitors to enter in the market with same features
 
MARKET-PENETRATION PRICING
Setting a low price for a new product in order to attract a largenumber of buyers and a large market share
Market has to be price sensitiveOther costs like distribution cost must fall with rise in sales volumeMust be able to deter entry of competitors

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