Chapter-11

Pricing Strategies
Additional Considerations
Objectives outline

• New product pricing strategies

• Product mix pricing strategies

• Price adjustment strategies
• Price changes
• Public policy and pricing
 New product pricing strategies

Pricing strategies usually changes as the product passes through

its life cycle . Companies bringing out a new product face the

challenge of setting price for the first time.

Two broad strategies

• Market-skimming pricing

• Market penetration pricing

 Market-skimming pricing
• Setting a high price for a new product to skim maximum
revenues layer by layer from the market ,the company
makes fewer but profitable sales. E. g Apple>>92 % of all
smartphone profits
• when to use

- product quality and image support higher price

-enough buyer must want the product at that price
-competitors should not be enter the market easily
 Market- penetration pricing
• Setting a low price for a new product in order to attract a large
number of buyers and a large market share. e .g AGIT

• When low price strategy works

-the market must be the highly price sensitive so that a low

price produces more market growth

- production and distribution cost decreases as sales volume

increases

-the low price must be keep out the competition , maintain its
low price position