Problem
Read the HBR article "Pricing Policies for New Products" by Joel Dean. The article discusses the challenge for top management of estimating demand and pricing a new product. The article shows how the initial problem of estimating demand can be broken into a series of four subproblems:
a) Will the product will go at all?
b) What price range will make the product economically attractive to buyers?
c) What sales volumes can be expected at various points in this price range?
d) What reaction will the price produce in manufacturers and sellers of displaced substitutes?
Next the article discusses how the strategic decision in pricing a new product is the choice between (i) a policy of high initial prices that skim the cream of demand and (ii) a policy of low prices from the outset serving as an active agent for market penetration. There are many other pricing strategies that can be considered, such as market pricing, EDLP (Everyday Low Pricing) vs high-low pricing, bundled pricing, segmentation pricing, and channel pricing. When you think of new products like Disney+ or products of other live TV streaming services, like YouTube TV or fuboTV, what are some pricing strategies used?