Pricing Strategy. Now that the product and promotional decisions have been made for the new product, Michelle is concerned about the pricing of the new product and the distribution channels that will be used to make the product available to customers. She has asked you to write a 2-3 page memo outlining two different pricing strategies that MM should consider. Her voice mail message goes on to say, I want you to recommend which strategy you think should be used for the target market and why. The second part of the memo should outline a distribution plan that will make the product available to the target customers. You are ready for Michelle's request and begin drafting the memo to her that same day.

Pricing strategy

introduce
Once a company has defined its marketing strategy, it is important to decide on them
Pricing strategy for its products. These strategies are crucial because they make things easy
Consumers determine the price ranges for the different products offered. reasonable
Strategy is important to a business because it affects how leads are received
products on the market. When a company underprices its product, it becomes difficult
Generate sufficient interest or a reasonable profit margin (Sammut-Bonnici & Channon, 2015).
If the price is too high, the company risks losing consumer interest. so the company
An appropriate pricing strategy needs to be determined.
Pricing Strategy 1
When launching a new product, the first pricing strategy associated with the company applies.
The Loss Leader Pricing Strategy Is A Synthetic Risk Technique, But For Large Firms
Costs can be covered by selling other products. This is a pricing technique that involves
Price products below production costs (Li et al., 2012). It is inherently helpful because
It attracts potential buyers to relatively cheap new products. that can work
The firm, because it is large, can price new products unprofitably, and
Compensation for production costs of other goods and services provided. primary goal of this

2
The pricing technique is to get the consumer to buy the product. Therefore, it is both pricing
Techniques and optimal marketing strategies when introducing rigid products into new markets
Contest. This is very similar to market penetration pricing, where when to maintain
Prices will be reduced during the initial stages of launching new, more comprehensive offerings
Many customers are more likely to know about these products.
Pricing Strategy 2
Value-based pricing is a strategy companies can use to understand consumer needs.
The perceived value of a new product or service. it depends on the
Behavioral and psychological characteristics of consumers. The price set by the company will not
Based on acquisition cost, but purely based on consumer value. therefore a customer
Centralized pricing technology.
Application of Pricing Strategies
In order to apply the first pricing strategy, it is necessary to know all product costs
Production and other inputs that bring a product to market. A perfect example would be
If manufacturing costs and all additional expenses are incurred for the introduction of a new product
The company spent about $2.5 million to launch 70,000 new products in the target market. it
This means that the total cost of one product is approximately $35.7. gain profit,
Proper business logic means that the company should sell each product for about $40. However,
Loss Leader Pricing advocates starting the sale around $33 and gradually increasing the price
After that, once you attract and retain customers. To apply value-based pricing techniques,
Businesses just need to understand how consumers rate their products. ditto
For example, if it costs $35, that’s the best price. The best pricing strategy is value

3
Based on pricing, because consumers will buy more if their perceptions are considered in advance
The price is fixed.
distribution channel
Many factors affect the choice of sales channel. types they include
Product, type of market, role of intermediaries, type of production unit, etc.
(Chand, 2021). In this case, the most relevant factors for choosing a distribution channel are, for example
The types of new products are Product Type, Intermediary, and Market Type. the best
Sales planning is done using an intermediary who understands the target market.
in conclusion
Different pricing strategies can be used when launching new products in target regions
market. Value pricing and loss leader pricing generally apply. you take over the headquarters
factors, consumers. The distribution of products depends on the services of intermediaries, that
market and new products being sold.

4

refer to
Chandler (2021). Distribution Channels: 6 Factors to Consider When Choosing a Distribution Channel
distribute. Your library of articles. https://www.yourarticlelibrary.com/stores/channel-of-
Sales – 6 Factors to Consider When Choosing a Sales Channel / 25909

Li X, Gu B & Liu H (2012). Price Dispersion and Loss Leader Pricing: From
The online book industry. SSRN Electronic Journal, 1(1).
https://doi.org/10.2139/ssrn.2128372

Sammut-Bonnici, T., & Channon, DF (2015). Pricing Strategy. Wiley’s Encyclopedia
Management, 12(1), 1-3. https://doi.org/10.1002/9781118785317.weom120162

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