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Unformatted text preview: te Company Sets Prices Based on What
Competitors Are Charging SealedBid ? Company Sets Prices Based on What They Think Competitors ?
Will Charge 9-14 New-Product Pricing
MarketSkimming Setting a High Price for a New Product to “Skim”Maximum Revenues from the Target Market. Results in Fewer, But More Profitable Sales. • Use Under These Conditions: – Product’s Quality and Image Must Support Its Higher Price.
– Costs Can’t be so High that They Cancel the Advantage of Charging More.
– Competitors Shouldn’t be Able to Enter Market Easily and Undercut the High Price.
9-15 New-Product Pricing
• Use Under These Conditions: – Market Must be Highly PriceSensitive so a Low Price Produces More Market Growth.
– Production/Distribution Costs Must Fall as Sales Volume Increases.
– Must Keep Out Competition & Maintain Its Low Price Position or Benefits May Only be Temporary. Market Pene...
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