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ABC Inc., is a manufacturer of ball-point pens, pencils, and stationery. The firm’s primary?.?

ABC Inc., is a manufacturer of ball-point pens, pencils, and stationery. The firm’s primary?

ABC Inc., is a manufacturer of ball-point pens, pencils, and stationery. The firm’s primary

distribution strategy is to sell in large volumes to office supply stores and large discount

chains. Mr. XYZ, CEO of ABC Inc. had hoped to manufacture and sell in large enough

quantities that prices could be held low. However, in the first several months, the firm

experimented with the price portion of its marketing mix in an effort to cater number of

markets.

1. In starting out with a market-penetration pricing strategy at ABC Inc., what assumptions

could be made about the market(s), it was serving?

2. Why might have Mr. XYZ avoided using market-skimming pricing at ABC Inc.?

3. How could optional product pricing be used by ABC Inc.?

4. How might product line pricing be initiated at ABC Inc.?

5. If ABC Inc., decided to introduce its products internationally, what factors may impact a change

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  • 1 decade ago
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    ABC Inc. is a manufacturer of ballpoint pens, pencils, and stationery. The firm’s primary distribution strategy is to sell in large volumes to office supply stores and large discount chains. Mr. XYZ, CEO of ABC Inc. had hoped to manufacture and sell in large enough quantities that prices could be held low. However, in the first several months, the firm experimented with the price portion of its marketing mix in an effort to cater number of markets.

    1. In starting out with a market-penetration pricing strategy at ABC Inc., what assumptions could be made about the market(s), it was serving?

    Ans: The following assumptions will be made to enter the market.

    i. The price of this product is the most reliable as compare to other relative product available in the market.

    ii. Prices can be decreased by avoiding value added functions.

    iii. There is enough demand for that product in the market.

    iv. The product offered to customer has enough valued to justify its cost.

    v. The product should be designed such it will in the reach of all people of different classes.

    2. Why might have Mr. XYZ avoided using market-skimming pricing at ABC Inc.?

    Ans: A pricing technique designed to allow a business to charge each potential customer the most that he would be willing pay for a given product or service. The product or service is first offered at the highest price that customers will pay, and the price is detrimentally dropped until it reaches a point designed to be available for the long term.

    3. How could optional product pricing be used by ABC Inc.?

    Ans: Optional-product pricing is when after the initial pricing of a product is offered additional accessories are offered for that product at a price. Many companies offer a savings on bundled goods with the purchase of product. Some companies may include cable companies, car companies, cell phone companies, banks, etc. This is a pricing option that has gained popularity over the years.

    4. How might product line pricing be initiated at ABC Inc.?

    Ans: Firms often differentiate their product lines vertically to capture consumers' differential willingness to pay for quality. Additionally, many firms offer products varying not in quality but in characteristics such as scent, colour, or flavour that relate to horizontal differentiation. First, how do consumers perceive product line and flavor attributes' Second, given consumers' preferences. To better understand these product-line pricing strategies, address two key issues.

    5. If ABC Inc., decided to introduce its products internationally, what factors may impact a change in price?

    Ans: If they decide to introduce it internationally the following factors may impact a change in price.

    i. Marketing cost could increase.

    ii. Place i.e. access to market cost should increase.

    iii. More distribution channel would be required.

    iv. Promotion and advertisement cost will also increase.

    In such factors keeping the cost to the low value would not be possible.

    6. Explain how product-form pricing may be a pricing option at ABC Inc.,

    7. Would quantity discounts be possible for ABC Inc., to offer? Why?

    Ans: Yes it is possible because by doing this, they can sell more product and can get more revenue. Hard selling is also a well option for selling products in bulk but one point is important to remember that the price should not go low below thrash-hold to be a loss in the profit.

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  • 1 decade ago

    If they decide to to introduce it internationally the following factors may impact

    • 1.marketing cost would increase.

    • 2.placement ie access to to market cost would increase.

    • 3. more distribution channel woul be required.

    • 4.promotion cost will also increase.

    Keeping the cost to low value would not be possible

    • 6. Explain how product-form pricing may be a pricing option at ABC Inc.,

    • 7. Would quantity discounts be possible for ABC Inc., to offer? Why?

    • Yes it is possible because by doing so they can sell more product and can generate more revenue. hard selling is also a good option for selling products in bulk but one point is important to remember that the price should not go low below thrash-hold to be a loss inn the profit.

    price skimming

    Definition

    A pricing technique designed to allow a business to charge each potential customer the most that he or she would be willing pay for a given product or service. The product or service is first offered at the highest price that customers will pay, and the price is incrementally dropped until it reaches a level designed to be viable for the long term

    Product pricing strategy by which a firm charges the highest initial price that customers will pay. As the demand of the first customers is satisfied, the firm lowers the price to attract another, more price-sensitive segment.

    Therefore, the skimming strategy gets its name from skimming successive layers of "cream," or customer segments, as prices are lowered over time.

    Establishing a relatively high price for a product or service; also called high-price strategy. This usually works for product innovations with limited competition and a low or negative price elasticity of demand. Skim pricing enables the seller to more rapidly recover the costs of development and introduction. This strategy carries some risk in that it will attract more competitors to the market and may antagonize consumers. A skim pricing strategy also works well with prestige products such as perfume.

    Low price

    Establishing a relatively low price for a product or service, usually to stimulate demand and acquire market share. This makes the most economic sense for the seller when there are significant economies of scale achievable from high volume production, or when the buyers are price sensitive and the seller has few competitive advantages

    Optional-product pricing

    Optional-product pricing is when after the initial pricing of a product is offered additional accessories are offered for that product at a price. This is a pricing option that has gained popularity over the years. Many companies offer a savings on bundled accessories with the purchase of product. Some companies may include cable companies, car companies, cell phone companies, banks, etc

    Product-Line Pricing

    Overview: Firms often differentiate their product lines vertically to capture consumers' differential willingness to pay for quality. Additionally, many firms offer products varying not in quality but in characteristics such as scent, color, or flavor that relate to horizontal differentiation. To better understand these product-line pricing strategies, address two key issues. First, how do consumers perceive product line and flavor attributes' Second, given consumers' preferences.

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