What are the two pricing strategies that a business can select for pricing new products? Give an advantage and a disadvantage of each
Premium pricing:
Premium pricing strategy is used when a new product is launched mainly in the luxury segment and have a distinct competitive advantage over the competitors’ products. A premium-priced product is priced higher than its competitors. It is most effective in the beginning of a product's life cycle
Advantage: Company can be able to earn on high return on investment.
Disadvantage: Too much higher price set bad impression of the manufacturer.
Price skimming is a pricing strategy where very high price is set in order to sweep the market and earn high on the investment and gradually lowering the price in the market.
Advantage: More revenue earn from the early purchases
Disadvantage: Difficult to lower the price as it will hamper the brand image
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