Mgt Acc 1 by https://padlet.com/sadiakhan4/Bookmarks UG en-us 2021-01-24 10:50:29 UTC 2025-10-25 23:33:25 UTC hello@padlet.com Group 1 sadiakhan4 https://padlet.com/sadiakhan4/Bookmarks/wish/1118472841 - Since there are existing substitutes in the market, Mike and John should adopt a penetration pricing policy with low prices to gain rapid acceptance of the product to gain a large share of the market, and then raise prices after adoption to be able to make profits before competitors can develop alternatives. They can price their product. Considering that the lowest combined prices of the two products that new product is trying to replace is £95 and their variable costs are £65.50, they can comfortable price their new product lower than £95 and gain market share while still operating at acceptable margins

- Considering that the new product is in the early stages of the product lifecycle, in the introduction stage, they can set the prices low and even operate at negative profits to gain market share and then increase prices as there is more adoption.

-they could also adopt predatory pricing policies to set prices low enough to drive out the competition before raising prices and have a greater market share and higher profits




]]> 2021-01-24 10:52:48 UTC https://padlet.com/sadiakhan4/Bookmarks/wish/1118472841 https://padlet.com/sadiakhan4/Bookmarks/wish/1123035711 2021-01-25 17:08:33 UTC https://padlet.com/sadiakhan4/Bookmarks/wish/1123035711 Group 3 https://padlet.com/sadiakhan4/Bookmarks/wish/1153505453 -          Seems to be competitors in the market already but this firm has a product which fills a different gap in the market
-          As a local business, they may not have too much brand recognition, overall market share, and brand loyalty
-          They should think about gaining market share and a good reputation for this new product within the forecast two years where there will be no competition (time taken for competitors to produce a similar product)
-          This may be done by penetration pricing to maximise demand; however, they must think about their R&D costs – telephonic/tech product likely to have required a significant amount of R&D – especially as they predict it will take 2 years for competitors to produce a similar product
-          This implies that the product is complex and required significant R&D. May not want to price too low in order to cover some R&D costs
-          This may also be viable as they are filling a gap in the market so consumers may be willing to pay a price premium indicated by the positive response in market research.
-          Higher pricing may also be better for rationing their products – relatively low productive capacity – pricing too low and having insufficient stock will damage brand reputation and loyalty.

- whilst establishing in the market, pursue price penetration
- after establishing a customer base and brand loyalty, price skimming can be used to recover high implied R&D costs

]]> 2021-02-02 13:30:23 UTC https://padlet.com/sadiakhan4/Bookmarks/wish/1153505453 Group 2 https://padlet.com/sadiakhan4/Bookmarks/wish/1153572647 -Adopt skimming pricing policy
-Make use of novelty and time gap (2yrs)
- Even though there is some competition, their product can remain competitive due to novelty factor (producing 1 product) meanwhile the market offers two product
- Given the variable cost is low, they can gain huge profit as long as they price their product around 95 to 200, that is a mark up of 50%-70% or more.
- As long as they can find an optimum price to meet max demand, they can progress well
-Then, by time, as the competitors can develop the same product, they can reduce their price to remain competitive and drive out competitors.
- Other things to consider are the limitations of production capacity, so pricing it at a higher price would be suitable to reduce demand and make full use of capacity available. 
-Charging too low might cause excess demand that the company could not meet as they are limited by 500 unit per month.
- As this is in the early stages of product, it is suitable to use skimming.



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