--%>

Define the pricing of a new product

Define the pricing of a new product.

E

Expert

Verified

Methods and strategy:

Under pricing a new product, usually two kinds of strategies are suggested. They are as follows:

1. Skimming price strategy:

It is done with a fundamental idea of gaining a premium by those buyers who always ready to pay a much higher price than others. Therefore a product is priced at a very high level because of incurring large promotional expenses in the previous stages. Therefore skimming price refers to the high initial price charged while a new product is introduced within the market.

2. Penetration price strategy:

It is the practice of charging a low price right from the starting to stimulate the growth of the market and to imprison large share of this. Because the price is lower, the product quickly penetrates the market, and consumers along with low income are capable to purchase this.

   Related Questions in Managerial Economics

  • Q : Equilibrium point on the resource

    An equilibrium point on the resource demand curve of a competitive firm operating within a competitive labor market would indicate equality among the resource price and: (w) demand elasticity. (x) quantity demanded. (y) VMP of the resource. (z) output

  • Q : Requirement of Screening Boris operates

    Boris operates a local landscaping company, needs each potential employee to lift a 200 pound tree before being hired whole-time. This obligation is an example of: (1) signaling. (2) discrimination. (3) screening. (4) derived demand. (5) automation.

    Q : Marginal Revenue Product of Labor When

    When a firm hires 1 unit of additional labor that increases output through two units, and marginal revenue is $100, the marginal revenue product of labor is: (w) $100. (x) $50. (y) $150. (z) $200. How can I solve m

  • Q : Value of Marginal Product of Labor The

    The social value of the extra output by additional units of labor is: (1) marginal revenue product of labor. (2) price of labor. (3) average revenue product of labor. (4) value of the marginal product of labor. (5) marginal resource cost of labor.

    Q : Supply of labor by increase in wages

    If the wage rate increases from $25 per hour to $40 per hour, in that case the elasticity of the supply of labor from this worker is roughly: (i) zero. (ii) 7/15. (iii) 13/15. (iv) one. (v) minus 13/15.

    Q : Define the some criticized highlight

    Define the some criticized highlight points of Adam Smith?

  • Q : Labor demand increases and supply

    Wages tend to increase while labor demand: (w) and supply both decrease. (x) decreases and supply increases. (y) and supply both raise. (z) increases and supply decreases. Please choose the right answer from above.

  • Q : Why is wealth definition of economics

    Why is wealth definition of economics criticized?

  • Q : Explain the meaning of price Explain

    Explain the meaning of price.

  • Q : Advantages and disadvantages of Survey

    What are the advantages and disadvantages of survey techniques?