Which one of the following will be the appropriate pricing strategy for a new product expecting an expanding market?
Penetrating pricing
The question concerns the launch price for a brand-new product entering a market that is expected to expand, and asks which strategy fits that situation best.
Penetration pricing sets a deliberately low introductory price so that the firm can attract a large number of buyers quickly, build a big market share while the market is still growing, gain economies of large-scale production, and discourage rival firms from entering because margins look thin. This matches an expanding market perfectly.
Skimming pricing does the opposite: it sets a high initial price to earn the maximum margin from the few early adopters who will pay it, and then lowers the price in stages. This suits a limited or price-inelastic market, not one expected to expand.
Monopoly pricing depends on the firm having real market power, and differential pricing simply charges different prices to different buyers or segments; neither is defined by the new-product, expanding-market situation described.
Hence the appropriate strategy is penetrating pricing.
Similar Questions
Find the most appropriate sequence of life-cycle of price for a product, from the initial stage to the mature stage.
After determining its pricing objectives, what is the next logical step a company should take in setting its pricing policy ?
The practice of selling below cost, with an intention to destroying the competitor is referred to as :
Select the correct sequence of steps in setting a pricing policy:
(a) Determining Demand
(b) Analysing competitors' costs, prices and offers
(c) Selecting the Final Price
(d) Selecting the Pricing Objective
(e) Estimating costs
(f) Selecting a pricing method
Codes:
The price setting method most closely corresponding to the concept of product positioning is:
A company prices a 2 litre bottle of its mineral water at ₹ 30 but 60 ml of the same water in a moisturizer spray for ₹ 75. This is an example of which one of the following pricing practices?
When the Companies pay less attention to its own costs or demands and bases its price largely on competitors’ prices, then it is known as :
The practice of selling below cost, with an intention to destroying the competitor is referred to as:
After determining its pricing objectives, what is the next logical step a company should take in setting its pricing policy?
Find the most appropriate sequence of life-cycle of price for a product, from the initial stage to the mature stage.
Important Questions from Pricing decisions
Pricing practice of setting a price target and then developing a product that would allow the firm to maximise total profit at that price is called:
Which of the following is the characteristic of price?
In which of the following price adjustment strategies. a company reduces prices to reward customer responses such as volume purchases, paying early or promoting the product?
The consumer's price sensitivity is / are influenced by
A. Who bears the cost
B. What percentage of total expenditure does the product represent
C. Who bears the cost and type of retailer from where customer purchases
D. Consumption of product by the customer
E. Knowledge about the product
Choose the most appropriate answer from the options given below:
- Which of the following are the informal pricing methods ?
I. Cost plus
II. Competitive
III. Rate of return
IV. Trial and error
Codes :
