Marketing Strategy, Penetration Strategy

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Introduction Pricing is an important strategic issue because it is related to product positioning. There are many ways to price a product, eg. price skimming, penetration pricing, etc. Price skimming is a pricing strategy in which a marketer sets a relatively high price for a product or service at first, and then lowers the price over time where a new, innovative, or much-improved product is launched onto a market. The objective with skimming is to “skim” off customers who are willing to pay more to have the product sooner; prices are lowered later when demand from the “early adopters” falls. The success of a price-skimming strategy is largely dependent on the inelasticity of demand for the product either by the market as a whole, or by…show more content…
In order to win back the traditional female consumers, COACH begins large-scale strategic adjustments, and some of the positioning of advertising pointing to younger consumers. COACH first readjusted the company 's management, and part of the manufacturing shift to Asia, Central America and Europe. At the same time, COACH expanded product line, new products, including watches, footwear, jewelry, hats, scarves and gloves. From my view, the most obvious potential disadvantage of implementing a penetration pricing strategy is the likelihood of competing competitors following suit by reducing their prices also, thus nullifying any advantage of the reduced price. A second potential disadvantage is the impact of the reduced price on the image of the offering, particularly where buyers associate price with quality. A Brand Ambassador can be employed to embody the corporate image of COACH in appearance, demeanour, and values. With celebrity endorsement, the marketing strategy can be switch between pricing skimming and penetration price to increase the profits. Apple Apple Inc. uses the Apple brand to compete across several highly competitive markets, including the personal computer industry with its Macintosh line of computers and related software, the consumer electronics industry with products such as the iPod, digital music distribution through its iTunes Music Store, the smart phone market with the
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