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

Lock box system, Lock Box System:   In this type of system, the customers a...

Lock Box System:   In this type of system, the customers are advised to mail their payments to a post office box hired through the firm for collection purposes near their region. T

Break even analysis, BREAK EVEN ANALYSIS Break even analysis is mainly us...

BREAK EVEN ANALYSIS Break even analysis is mainly used to explain the relationship between the cost incurred, the volume operated at and the profit earned. To compute the breakev

What are the advantages of incremental budgeting, Advantages of incremental...

Advantages of incremental budgeting a) The budget is stable and change is gradual b) Managers can operate their departments on a steady basis c) The system is relatively

Determine the profitability ratios, Profitability ratios The primary ob...

Profitability ratios The primary objective of a business under taking is to earn profits. Profit earning is considered necessary for the survival of the business. A business re

Investing surplus cash, The requirement for working capital fluctuates acco...

The requirement for working capital fluctuates according the level of inventory, production, debtors and creditors etc. The working capital needs are not uniform during the year be

Determine the traditional classification, Determine the Traditional classif...

Determine the Traditional classification a) Balance sheet or position statement ratios: balances sheet ratios deal with the relationship among two balance sheet item e.g., th

FIFO, I WANT TO KNOW THE RULES FOR DOING LIFO AND FIFO

I WANT TO KNOW THE RULES FOR DOING LIFO AND FIFO

Benefits/ disadvantages of the costing techniques , Question 1 A healt...

Question 1 A healthcare company specializes in hip, knee and shoulder replacement operations, known as surgical procedures. As well as providing these surgical procedures, the

Transportation problem-solution, Transportation Problem-Solution Soluti...

Transportation Problem-Solution Solution of the Transportation Problem: The fundamental steps of the transportation method are: Step 1:       Determine a preliminary b

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