Pricing Strategies Report: Skimming, Value, Premium, Penetration

This report examines various pricing strategies, including skimming, value, premium, and penetration, within the context of specific case studies. The report begins by discussing the application of the skimming strategy for a company launching a new 3-D television, emphasizing its potential to maximize profits from early adopters. It then explores the use of value pricing for a new shampoo, highlighting its effectiveness in expanding market share through competitive pricing. The report further analyzes the premium pricing strategy for a company introducing the latest iPhone, focusing on its appeal to a specific demographic. Finally, it assesses the penetration strategy for a new fashion company expanding its high-end brand, emphasizing its role in capturing market share and increasing sales through lower prices. The report concludes with a discussion of the advantages and disadvantages of each pricing strategy, supported by relevant references.

Running Head: Pricing Strategies
Pricing Strategies

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Table of Contents
Introduction.................................................................................................................................................2
Task -1.........................................................................................................................................................2
Task-2..........................................................................................................................................................2
Task-3..........................................................................................................................................................3
Task-4..........................................................................................................................................................4
References...................................................................................................................................................6

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Introduction
In this present paper, it is to be discussed the pricing strategy that is appropriate according to the
case. A pricing strategy refers to the practices that companies generally adopt in order to price
their products and services (Weisstein et al., 2015). The pricing strategy assists in identifying the
product optimal prices, typically including overall marketing objectives and economic trends.
Task -1
The company must adopt the skimming technique because skimming is a strategy that is being
designed to augment the profit by compromising the fee for the product and services over a
couple of years. After setting the initial price high for early adopters who are gradually less price
–conscious consumers.
The company has developed a new 3-D television that is with an outstanding display. The people
can watch the 3-D Movie without using the glasses. Moreover, the skimming technique is
appropriate as the company can generate maximum profit from it. Price skimming is the most
effective way to maximize profits on new offerings and product. Skimming policy helps in
understanding that price is an indicator of quality for many buyers. The company generally
utilizes the skimming policy in order to boost the market share with higher initial pricing. By
pricing the goods high, companies can create an impression of good quality that will induce more
customers or basically early adopters to buy the product.
Task-2
For launching the new shampoo whose cost is generally low as compared to its competitors. The
Economy or Value pricing strategy will be fruitful for the company. By following the Economy

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strategy the company can generate desirable outcomes from it. In this case, if another pricing
strategy is being used then it will not be futile for the company. The company needs to take
meticulous care of the price so that they can expand their productivity as well as market share.
Value pricing is a strategy that generally bridges the gap between luxury and economy. In
economy pricing, the consumer cost of services or good is more as compare to its sum of the part
(Brogaard et al., 2015). The major advantage that can be the drive for this strategy is that positive
consumer perception. Value pricing lines tend to be more resistant to the downturn of the
economy. The Value pricing strategy makes the customers feel that it is a good deal to use. It
basically justifies the price beyond its components. This expectation forms the unspoken contract
between the brand and consumer. Making use of value pricing the company can augment the
sales volume to generate profit. This strategy also helps in increasing the brand loyalty and
consumer awareness, rather than price point solely. A value price strategy assures that consumers
they are making a purchase are adequate than overblown. This strategy justifies that the product
is a luxury item which is not too expensive. This strategy actually relies on the sales volume to
turn up their profit. But still, value pricing is economically viable for the company. It also offers
a superior profit margin to the company.
Task-3
The Company has just opened the new electronics shop and Apple is releasing its latest iPhone in
a few day. The company must choose the premium policy for iPhones. Adopting the premium
strategy assists in fetching favorable outcomes. Premium pricing actually refers to that strategy
in which the company generally set the price higher than the market price in an expectation that
consumer will be fascinated with the unusually high-quality product. Sometimes consumer buys

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the product in the expectation of the reputation. Premium pricing works great in the
circumstances when there is a perception among the people to buy the “luxury” product for them.
Mostly the young youth is curious about the products of iPhone. So the company needs to target
that people in order to increase sale volume and profit. This approach is difficult one to maintain
and create for the company to accomplish their goals and targets on time. Setting up the prices is
generally the crucial part for every company. Premium Pricing is commonly known as “image
pricing “.This helps in making the customers feel that the product is more valuable than similar
offering companies. The penetration ultimately supports the company in bringing or increasing
more revenue. In-fact the premium pricing acts help the new companies to set the accurate and
fair prices on the services and goods in the beginning. This supports the company in creating the
core benefits or competitive advantage. Premium pricing helps in making the product more
prestige.
Task-4
There is a new fashion company who is generally planning to expand their high-end brand that
will be well known among the wealthy and fashionable conscious. The main aim of the company
is to disseminate the information about the aesthetic design of the blue jean. The fashionable and
gorgeous design of the blue jeans helps in inducing the new customers to buy their product.
When the company generally enters into the market it is mandatory for them to adopt the
penetration strategy. Penetration policy acts as a yield in seizing the market share which is the
basic aim of the company. Furthermore, penetration strategy is rapidly used to determine
whether the blue jeans are able to capture a fixed percentage of the market share. The company
needs to identify the various tactics and strategies in order to raise the sales and reduce the

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competitors. When the basic motto of the company is to increase the sale then lowering the price
should be an effective strategy to attain and attract huge customers for the blue jeans( Sener et
al., 2017).The lower price will charm the potential buyers with affordable prices. Penetration
policy makes the customers doubt more clear about the quality. This helps in building the great
trust among the various customers. Penetration policy will target the customers who are
fascinated by the trendy fashion. Market penetration can be raised by the consumption of the
product. Penetration strategy is efficient in increasing the product awareness and maintaining the
brand loyalty.

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References
Weisstein, F. L., Kukar-Kinney, M., & Monroe, K. B. (2016). Determinants of consumers'
response to pay-what-you-want pricing strategy on the Internet. Journal of Business Research,
69(10), 4313-4320.
Zhang, J., Chiang, W. Y. K., & Liang, L. (2014). Strategic pricing with reference effects in a
competitive supply chain. Omega, 44, 126-135.
Sener, C., & Fthenakis, V. (2014). Energy policy and financing options to achieve solar energy
grid penetration targets: Accounting for external costs. Renewable and Sustainable Energy
Reviews, 32, 854-
Brogaard, J., & Detzel, A. (2015). The asset-pricing implications of government economic policy
uncertainty. Management Science, 61(1), 3-18. 68.