Pricing Strategies
Exercise #10
Right, you’ve got the product right; the next stage is to price it. Wow, what a task!
1. List the factors MJA, Inc. will have to take into account while deciding how to price the product.
● Levels of competition.
● Fixed and variable costs.
● Competition.
● Company objectives.
● Proposed positioning strategies.
● Target group and willingness to pay.
2. What combination of pricing strategies could MJA, Inc. consider?
● Competition pricing: Pricing the computer products similar to competitors’ pricing.
● Bundle pricing: Bundling the computers with scanners, digital cameras, printers, and software.
● Psychological pricing: Selling PCs at $499.99 or $999.99 (just below the psychological price of $500 or $1000).
● Optional pricing: Giving the users options for upgrades (very common in the PC industry).
3. Work out a pricing strategy as the product moves through the four stages of the product life cycle. Plot how your pricing strategy may change as it moves through the product lifecycle.
● Introduction: Premium psychological price. The product is new with the latest technology.
● Growth: Skimming price. Reduce price as product sales grow.
● Maturity: Physiological pricing with price lowered with offered bundles.
● Decline: Product line pricing. Reduce the price of existing models and introduce new lines.
