Pricing the Product Assignment Example | Topics and Well Written Essays - 500 words

Pricing the Product - Assignment Example As the new products are set to the market for commercialization it would be recommended to utilize a pricing strategy which maximizes the current profits. The company should estimate the demand and costs associated with alternative prices and choose the price that produces maximum current profits, cash flow or rate of return on investment. In emphasizing current performance the company may sacrifice long-run performance by ignoring the effects of other marketing-mix variables, competitors’ reactions and legal constraints on price. However as the product matures in the market and if the company is pursuing to keep the product in the market, it would be recommended to utilize the market-skimming pricing strategy as a sufficient number of customers would have a high current demand and high price communicates the image of a superior product. Beside the high initial price (cost to market) will tend to discourage the competitors to compete in the same product quality