National University of Singapore Marketing Pricing Strategies Report

This report delves into the critical role of pricing strategy in business success, emphasizing its impact on profitability and customer appeal. It contrasts market skimming, exemplified by Apple's iPhone launches, with penetration pricing, illustrated by Netflix's initial market entry. Market skimming involves high initial prices that decrease over time, while penetration pricing uses low introductory prices to gain market share. The report provides examples of these strategies, analyzing Apple's ability to capture market share and high-profit margins through market skimming, and Netflix's strategy to rapidly acquire a large customer base with penetration pricing. Recommendations are provided, advising companies to align their pricing strategies with their primary business objectives, whether profit maximization or market share growth. It suggests considering competitive pricing and the feasibility of the product. The report concludes by highlighting the importance of adapting pricing strategies to achieve effective market growth.

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Marketing
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Table of Contents
Introduction......................................................................................................................................2
Compare and Contrast.....................................................................................................................2
Examples..........................................................................................................................................2
Recommendations and Conclusion..................................................................................................3
References........................................................................................................................................4

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Introduction
Pricing strategy play a vital role for the success of the business to the certain extent.
Every individual compare the price of the similar product with the products of the competitors. It
is essential for the companies to have a good pricing strategy as it allow the company to earn
maximum level of profit in its product and services as well as at the same time making it
appealing to the customers (Kienzler & Kowalkowski, 2017).
Compare and Contrast
Market Skimming is one of the pricing strategy in which the prices of the product will be
charge high for an innovative product at the initial stage that reduces to the certain extent when
more markets enter in the market with the similar type of product. Whereas, penetration pricing
strategy is one of the method in which the organization offer its product at low price in the
market to the consumers at the beginning to derive the maximum sales volume from the price
sensitive consumers (Nyaga & Muema, 2017).
Examples
The best example of market skimming is IPhone as whenever Apple launch new product
or phone in the market then it charge high price on the initial products then it decreases when
other company launches similar product or new product is being launched by the company. At
the initial, the price of iPhone X was high that decreases to $999 when iPhone 11 is launched.
Market skimming pricing strategy adopted by the Apple to earn maximum product at the
beginning level. The company can able to capture 27% market share with the help of such
strategy. Moreover, the product margin of the Apple is high. Apple has set up an objective to
earn maximum profit from the consumers by offering the product at the highest price (Baker,
Collier & Jayaraman, 2017).
One of the famous series Netflix followed the penetration pricing strategy when it
introduced its product in the market. The company offers its product at low cost at the initial
stage through which they can able to capture the big share of the cider market. At the initial the
company charged $4.99 in the year 2008 that enhanced to $11 till the year 2016. The company

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also provides free one month subscription Market penetration pricing strategy is adopted by
Netflix to cover maximum number of consumers by enhancing their sales. Moreover the product
margin of Netflix is low. The company can able achieve greater market shares which include 52
million in the year 2017 by offering its product at low cost to the certain extent (Kienzler &
Kowalkowski, 2017)
Recommendations and Conclusion
From the above analysis it can be highly recommended that every company should
analyze the purpose of their business that do they have a motive of maximizing profit or they
have a motive of capturing the market according to that it should adopt the pricing strategy due
to the main reason through adopting such strategy the company can grow in the market in an
effective as well as efficient manner. There are different types of pricing strategy that can be
adopted by the company. Therefore, the company can able to select its pricing strategy through
the feasibility of the product as well as after analyze the objective of the company to the certain
extent. Some of the leading companies have adopted competitive pricing strategy to compete in
the market. However, some of them use penetration pricing strategy. The companies should
analyze its pricing strategy of its competitor that will help them to compete its competitor in an
effective as well as in an effective manner.

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References
Baker, T., Collier, D., & Jayaraman, V. (2017). A new pricing strategy evaluation
model. International Journal of Operational Research, 29(3), 295-316.
Kienzler, M., & Kowalkowski, C. (2017). Pricing strategy: A review of 22 years of marketing
research. Journal of Business Research, 78, 101-110.
Nyaga, P. K., & Muema, M. W. (2017). EFFECT OF SKIMMING PRICING STRATEGY ON
THE PROFITABILITY OF INSURANCE FIRMS IN KENYA. International Journal of
Finance and Accounting, 2(3), 79-92.