Marketing Strategy: Price Competition, Skimming, and Penetration

This discussion post compares and contrasts price and non-price competition, highlighting the conditions under which each strategy works best. Price skimming is identified as suitable for high-status products, where initial high prices communicate value and quality, while penetration pricing is effective for new market entries, attracting consumers with lower prices. The post also examines consumer responses to airline surcharges and the popularity of low-season travel for discounted prices. It concludes by noting that technology companies often use price skimming for new products to maximize early profits, supported by peer contributions and relevant references. Desklib offers a wealth of similar solved assignments and study resources for students.

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FORUM POSTS 2
 For what type of products would price skimming be most appropriate? For what type of
products would penetration pricing be more effective?
Price skimming works best when the product being sold is one of high status, for example a car.
The price is set as high to communicate product value and quality and then reduced overtime.
Penetration pricing is appropriate when the company is entering a new market or introducing a
new product. It helps consumers notice the product due to price hence adopt the product. Price
skimming is one of the strategies used by companies whereby a firm charges the highest initial
price to make the consumers pay. It can be appropriately used when the number of consumers
willing to buy at a high price is high. Also, in aids in market segmenting. This is whereby prices
can be lowered to satisfy the needs of every consumer thus maximizing on the profits. Lastly, it
instills price consciousness among the buyers rather than having them to be prestige conscious.
Price skimming works best when the product being sold is one of high status, for example a car.
The price is set as high to communicate product value and quality and then reduced overtime.
Penetration pricing is a situation whereby a company sets low prices for the product to reach a
wide fraction of people. Its expectation is always that when customers receive such products,
they will easily shift to the new brand because of the low prices. It is appropriate when the
company is entering a new market or introducing a new product. It helps consumers notice the
product due to price hence adopt the product. Majorly, it is used in in discount stores such as
Wal-Mart. Here, first, it will be used as a bait for marketing of the new product so that it can get
market from their competitors. Lastly it can be used when the company is willing to lose money
just to get new customers.
Peers post
Price competition is depending on the low price to cover the market. When the products of
various companies are similar in performance, efficiency, offer, popularity and the
marketing, they can only depend on the low price to cover more market share (Chan,
Narasimhan & Yoon, 2017). As for the non-price competition, it depends on the different
service, advertises and channels to expand the market share, except the price. It is suitable
for the creative products.
As for the price skimming, it is suitable for the new and creative products in the market
when the customers do not have rational identification on the products. Their purchasing
motivation is curiosity. As for the new products in the market which there are already

FORUM POSTS 3
some similar products, they can use the penetration. As for the additional airline
surcharges, the customers can choose the low holiday seasons. People choose to take
holiday in low holiday seasons which is a seasonal discount. I once go to Japan in
September because of the seasonal discount. There are few tourists in Japan. When a
company launches its latest technology product, they will use the price skimming as it can
be gain the high profit in the early period to expand the production. For example, Apple
always takes price skimming.
I agree that pricing is an important factor when it comes to products. Many organizations use
pricing as a way of attracting and retaining consumers. Products which are frequently purchased
by consumers and are necessities often use price competition since there is very little
differentiation. An example is the purchase of milk. The major differentiation is fat levels or
milk type but many companies have similar products. Consumers therefore tend to choose the
milk that has a favorable price. Non-price competition can involve products such as salon
service. The service that one gets from one salon totally differs from another. Choosing to travel
during low seasons is the best holiday decision one can make because it enables massive savings
and enables one to enjoy more services and experiences for less money.

FORUM POSTS 4
References
Chan, T. Y., Narasimhan, C., & Yoon, Y. (2017). Advertising and price competition in a
manufacturer-retailer channel. International Journal of Research in Marketing
Liu, J., Zhai, X., & Chen, L. (2018). Optimal Pricing Strategy under Trade-in Program in the
Presence of Strategic Consumers. Omega.