Question

Firm A plans to introduce a new smart phone which has a potential market of 1 million customers. The marketing research conducted by the firm shows that 40% of the customers will buy t if the phone is priced at no more than S300 and the other 60% of the Customers will only buy it if the phone is priced at no more than $250.

Which of the following pricing strategies is best to help the firm achieve its maximum revenue?
a. Price it at $250 and $300 and use a discrimination strategy to reach the two segments of the market
b. Price it at the middle of the two prices ($250+$300y2-$275)
c. Price it at $250 and use the pull strategy
d. Price it at $300 and use the pull strategy

Answer 1

a. Price it at $250 and $300 and use a discrimination strategy to reach the two segments of the market

Step-by-step explanation:

In order to maximize the revenue the price must be applied. But at the same time the first have to use the price discrimination strategy for reaching the two segments

So, The maximized revenue is

= (1,000,000 × 0.40 × $300 ) + (1,000000 × 0.60 × $250 )

= 120 million + 150 million

= $270 million

SO it would be lies in middle of $250 and $300

Hence, the first option is correct