Concept explainers
To determine: The conditions under which the manufacturer of the digital camera adopts the skimming and penetration pricing approach.
Introduction:
The method that is adopted by the firm to fix the selling price is known as pricing. The pricing generally depends on the average cost and the perceived value of the product.
Explanation of Solution
Skimming pricing approach:
The manufacturer of the digital camera may adopt the skimming price approach if there is already a significant perspective of a new product or if it has a unique characteristics. There are some type of protection from the competitive products like the patent that enhances the effectiveness of the skimming strategy.
Penetration pricing approach:
The penetration pricing approach may be adopted if the new product production unit and the costs for marketing declines as there may be an increase in the volume of production and the prices are sensitive in the market segments. This type of product may take part in the broad segment of the population and be positioned as a “me-to” product.
Want to see more full solutions like this?
Chapter 14 Solutions
MARKETING (LOOSELEAF)-W/ACCESS >CUSTOM<
- Why would a price skimming strategy probably not work for a “me-too” product, something very similar to a new-to-the-world product?arrow_forwardUnder what conditions would a camera manufac-turer adopt a skimming price approach for a newproduct? A penetration approach?arrow_forward1. Given that there is a serious disadvantage to cost-based pricing, how would your account for its widespread use in retailing and other businesses? 2. What is parity pricing? How does it differ from other forms of competition-based pricing? 3. Describe some ways that a seller using competition-based pricing could deal with the presence in the marketplace of a variety of prices for an item.arrow_forward
- Purchasing and Supply Chain ManagementOperations ManagementISBN:9781285869681Author:Robert M. Monczka, Robert B. Handfield, Larry C. Giunipero, James L. PattersonPublisher:Cengage LearningMarketingMarketingISBN:9780357033791Author:Pride, William MPublisher:South Western Educational Publishing