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Question
What pricing strategy will be used to launch shampoo?
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Solution
Penetrating pricing
Shampoo is a widely used Fast Moving Consumer Good (FMCG). Penetrating pricing is acceptable for this product.
This technique involves setting a low initial price so that the brand quickly gains popularity and market share. Shampoo demand is very elastic, which means that lowering the price can significantly increase demand. There is also strong competition in the shampoo business, so a cheap starting price helps to limit the entry of new companies and obtain widespread adoption. For example, shampoo sachets are sold at extremely low prices in order to target the rural and middle-class markets.
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RELATED QUESTIONS
Explain the below mentioned pricing strategy:
Penetrating pricing strategy
The strategy of introducing new product in existing market is classified as ______.
Introducing a product at low price and increasing the price once the brand succeeds is known as ______ pricing.
______ price refers to the high initial price charged when a new product is introduced in the market.
Setting a price below than that of the competition is called ______.
______ determines the sales volume and the profit margins.
Give two conditions under which parity pricing is desirable.
What is skimming pricing?
State two disadvantages of Cost plus pricing policy.
What are various strategies used for pricing a product?
