Answer to Question #256670 in Management for Dingaan

Question

The appropriate pricing strategy for new products, selecting between market‐

skimming or market‐penetration, providing theory and relevant application.

6 marks

The six (6) price setting guidelines considered when setting a pricing strategy

providing theory and relevant applica

Answer 1

1. Price skimming- Price skimming entails charging a high price when a product is first offered, then progressively decreasing it as more competitors enter the market.
2. Market penetration pricing- Market penetration pricing is the polar opposite of price skimming pricing. You take over a market by undercutting your competition, rather than starting high and gradually dropping prices.
3. Premium pricing- Premium pricing is reserved for businesses who produce high-quality goods and sell them to high-net-worth consumers.
4. Economy pricing-Economy pricing is focusing on clients who are wanting to save as much money as possible on whatever product or service they are purchasing. Walmart and other big-box shops