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Question
Which pricing strategy involves charging according to their competitors?
Options
Penetrating pricing
Cost Plus pricing
Skimming pricing
Parity pricing
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Solution
Parity pricing
Explanation:
Parity pricing, also known as going-rate or competitive pricing, is a strategic framework in which a company deliberately matches its price structure with the rates charged by its direct competitors. This strategy is quite prevalent in saturated markets with uniform products where price variations could result in a loss of market share, as opposed to internal methods like cost-plus or time-based models like skimming and penetration.
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| Evergreen Cosmetics is planning to launch a new range of ‘anti-wrinkle creams’ in the Indian market. They conducted a market survey and found potential competition from Remain Young. Since they are targeting the higher strata of society, the cream is being priced much higher than their competitors. They plan to use the television as a media to advertise this anti-wrinkle cream as opposed to print media which is largely used by them for their other products. Officials at Evergreen Cosmetics feel that with the correct style of promotion, they could easily be successful in the market. |
- Identify and explain the pricing strategy that is being used by Evergreen Cosmetics.
- Describe any two qualities that a salesman selling this product should possess.
- Explain any two tools of sales promotion that can be used here.
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"Penetrating pricing leads to setting a high initial price". Comment
