Question

As the product manager for Whirlpools line of washing machines you are in charge of pricing new products. Your product team has developed a revolutionary new washing machine that relies on radically new technology and requires very little water to get clothes clean. This technology will likely be difficult for your competition to copy. Should you adopt a skimming or a penetration pricing strategy? Justify your answer.

Answer 1

The appropriate pricing strategy is price skimming

Step-by-step explanation:

Penetration pricing strategy is adopted by a company launching a new product that has many competing products in the market place whereby a low initial price is set for the product such that customer's acceptance and patronage can be gained before the product is priced appropriately.

Skimming pricing strategy relates to a unique product being priced high in order to earn returns as quickly as possible before competitors begin to copy the new product.

Under this scenario,the washing machine is unique and would be appealing to consumers since it requires little quantity of water to make clothes clean,hence charging higher price would not deter households from purchasing it.

Answer 2

The management should adopt skimming pricing strategy.

Step-by-step explanation:

For the fact that this is a new technology and very difficult to be copied, the management should adopt skimming pricing strategy. This will allow them to charge high prices and make money in the market before their competitors starts making the same kind of washing machine. This product has benefits for the consumers as well as it consumes less water to clean the clothes so there is high probability of this machine is accepted even if the prices are exorbitantly higher and from this, its going to be demanded by many costomers.