1、new product pricing strategyBy-Yun zhongxu 1208020231 English122The new product pricing strategy is divided into two methods. One is skimming pricing and the other one is penetration pricing.1. Skimming pricingThe skimming pricing means when a new product being produced, the producer makes it more e
2、xpensive than its cost, in order to get more profit in a short term. The name of this method represents absorb essence, which is an advantage of the consumers psychological adventures. Conditions of use:(1) The product has its own features and a lot of people prefer to buy it.(2) The price elasticit
3、y of demand is small, so people have extra money and like to buy the product.(3) Although the product is very expensive, the company which produce it can sales it easily, because other company cant produce it at the same time.(4) If the company want the produce this product, it will cost a lot of mo
4、ney, so the quality of the product is very small. Because of this, the higher price the product is, the fewer people can afford it, and the balance between the demand and supply are established.(5) The quality of the product is very well and it comfortable to use. So people think it worth the price
5、Example of the Skimming pricingAs we all know, the Apple Inc is the best seller among the electronics companies. The first iPods price is up to 399 dollars. But the high price makes people think its a high-end product. Besides, its very beautiful and really comfortable to use. Later, the Apple Inc p
6、roduces iPod2, which is also very expensive but popular among young people. The Apple Inc use the Skimming pricing gained huge profits.2. Penetration pricingThe penetration pricing also means puerile strategy. When a new product being produced, the producer wants to make it very cheap, in order to a
7、ppeal customers as much as possible. This method is in order to occupy the market space quickly and obtain long-term profits. Conditions of use:(1) There are a lot of companies which produce the same kind of product at the same time, so the product has a lot of competitors. (2) The product has no sp
8、ecific and the price elasticity of demand is big. It need cheap price to sale more product so that to earn more profits.(3) The product has the feature that if the company produce many of it at a time, the price of each is cheaper than produce one at a time. In this condition, the company chooses th
9、e penetration pricing which means produce more and earn more. Example of the penetration pricingWal-Mart is the most famous retailers in the world. As a retailer which is only sales daily necessities, how can it become the second in the world top 500? The answer is that it chooses the penetration pr
10、icing which is suitable for itself. The Wal-Mart makes every product as cheap as possible and it always has promotions to appeal customers. Although the profit of each product is little, it wins in the number. The other method is satisfaction pricing strategy, which is between the penetration pricing and Skimming pricing. The three methods have it own advantages and disadvantages. If a company want to have a development, it should choose one based on their own condition.
