Show the process of pricing during introduction, Managerial Accounting

Assignment Help:

Q. Show the process of Pricing during introduction?

Pricing during introduction: in pricing a new product generally two kinds of strategies are suggested viz.

a) Skimming price policy: this is pricing policy in which a vary high price is fixed in the beginning that skims the demand from the outside. By this policy the company earns a huge amount of profit in the initial marketing of the product. When the competitors enter the fields the price are allowed to fall gradually. The company is able to recover the investment made in the product in a short period. This type of policy is used in case of products where the company expects heavy competition after some time and wants to take the cream before it happens.

b) Penetration price policy: in contrast with skimming price policy the penetration price policy involves a reverse strategy. It requires fixing a lower initial price designed to penetrate the market as quickly as possible. This policy is intended to maximize the profit in the long run therefore the firms pursuing the penetration price policy set a low price of the product in the initial stage.


Related Discussions:- Show the process of pricing during introduction

Determine the creditors turnover ratio, Creditors turnover ratio ( or payab...

Creditors turnover ratio ( or payables turnover ratio) Meaning: this ratio establishes a relation ship between net credit purchases and average trade creditors. Objective

Capital budgeting – planning investments, Project C would involve a current...

Project C would involve a current outlay of $50,000 on equipment and $15,000 on working capital. The investment in working capital would be increased to $21,000 at the end of the f

Special orders, Issa Company manufactures a personal computer designed for ...

Issa Company manufactures a personal computer designed for use in schools and markets it under its own label. Issa has the capacity to produce 25000 units a year but is currently p

The simplex method, The Simplex Method In the graphical solution the op...

The Simplex Method In the graphical solution the optimum solution is always associated with a corner (or extreme) point of the solution space. The simplex method is based funda

Cash planning, Firms need cash to invest in inventory, receivables and fixe...

Firms need cash to invest in inventory, receivables and fixed assets and to create payments for operating expenses, so as to increase earnings and sales and make sure the smooth ru

Full service recourse factoring, Full Service Recourse Factoring : In this ...

Full Service Recourse Factoring : In this kind of factoring the client has to bear the risk of default made through the debtors. There the factor had advanced funds against book de

Interger programing emuneration method, #questihow do we use emuneration me...

#questihow do we use emuneration method in interger programing

Expected future warranty claims, 1. Paid $350,000 to purchase furniture and...

1. Paid $350,000 to purchase furniture and leased it to DEF Corp. for 5 years. DEF agreed to pay $89,955 on July 1 for each of the next 5 years.  At the end of the lease term we ex

Case study, yolande tzar came to norethen ireland

yolande tzar came to norethen ireland

Transient analysis-absorbing state, Transient Analysis A state is said...

Transient Analysis A state is said to be transient if it is impossible to move to that state from any other state except itself. This state is temporary and eventually a stead

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd