There are two type of new product pricing strategies which is skim pricing and penetrate pricing.
A product pricing strategy by which a firm charges the highest initial price that customers will pay. As the demand of the first customers is satisfied, the firm lowers the price to attract another, more price-sensitive segment. * Used when
* Demand for the product is inelastic
* Represents technology breakthrough
* Limited production
A marketing strategy used by firms to attract customers to a new product or service. Penetration pricing is the practice of offering a low price for a new product or service during its initial offering in order to attract customers away from competitors. The reasoning behind this marketing strategy is that customers will buy and become aware of the new product due to its lower price in the marketplace relative to rivals.
* Set lower price to a new product to reach mass market during introduction stage * To dominate market, producing large volume which will lower the production cost * Avoid potential new entrants due to extremely low cost
The price that we have determined for our product is RM8.00 which is average price for a toothpaste. Therefore, the pricing strategies that we have choose is the penetrate pricing strategy which is the strategy adopted for quickly achieving a high volume of sales and deep market penetration of a new product. Under this approach, our product is widely promoted and its introductory price is kept comparatively low. This is also to avoid potential new entrants due to extremely low cost