Business – 3.3 The marketing mix – Pricing methods | e-Consult
3.3 The marketing mix – Pricing methods (1 questions)
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Model Answer
- Initial price‑skimming phase aimed at tech early adopters:
- Objective: Recover high R&D costs and generate strong early‑stage profit.
- Usefulness: Leverages the willingness of early adopters to pay a premium for cutting‑edge features.
- Implementation: Set a high introductory price for the first three months.
- Transition to penetration pricing for fitness enthusiasts after the skimming period:
- Objective: Rapidly increase market share in the growing health‑tech segment.
- Usefulness: A lower price removes the barrier for fitness‑oriented consumers who compare alternatives.
- Implementation: Reduce the price by 15‑20% and promote the value‑for‑money proposition.
- Price discrimination through student/teen discounts:
- Objective: Capture the price‑sensitive teenage market without eroding the perceived premium of the product.
- Usefulness: Offers a reduced price to a specific segment (e.g., via a verified student ID) while maintaining the standard price for other groups.
- Implementation: Introduce a 10% discount code exclusive to verified students, marketed through schools and social media.
- Dynamic pricing for online sales (optional):
- Objective: Optimise revenue by adjusting price in response to real‑time demand and inventory levels.
- Usefulness: Allows the firm to raise price during peak demand (e.g., holiday season) and lower it during slow periods.
- Implementation: Use an automated pricing algorithm linked to website traffic and stock data.
By combining skimming, penetration, and selective price discrimination, the company can meet multiple objectives: recoup investment, build market share, and attract price‑sensitive segments, while dynamic pricing adds flexibility to maximise revenue over the product life‑cycle.