Product and Brand Management

Pricing the New Product: Strategies and Best Practices for Marketers

by | Apr 8, 2022

Pricing is one of the most important decisions that marketers make when launching a new product. The right price can maximize profits and help the product succeed in the market, while the wrong price can lead to failure. In this blog, we will discuss the various pricing strategies that marketers can use to price their new products and the best practices that can help them make the right pricing decisions.

Cost-Based Pricing

Cost-based pricing is one of the most common pricing strategies used by marketers. It involves calculating the cost of producing the product and then adding a markup to determine the selling price. This pricing strategy ensures that the company covers its costs and makes a profit. However, it doesn’t take into account the demand for the product or the competition in the market.

Value-Based Pricing

Value-based pricing is a pricing strategy that takes into account the value that the product provides to the customer. This pricing strategy involves setting the price based on the customer’s perception of the product’s value. Companies that use value-based pricing focus on creating products that provide unique value to the customer and are willing to pay a premium price for that value.

Competitor-Based Pricing

Competitor-based pricing is a pricing strategy that involves setting the price based on the prices charged by competitors in the market. This pricing strategy can be useful for companies that are entering a market with established competitors. By pricing their product similarly to their competitors, they can compete on price and attract customers.

Penetration Pricing

Penetration pricing is a pricing strategy that involves setting the price low to enter the market and gain market share quickly. This pricing strategy is often used by companies that are launching a new product in a competitive market. By setting a low price, they can attract customers and gain market share quickly.

Skimming Pricing

Skimming pricing is a pricing strategy that involves setting the price high to target customers who are willing to pay a premium price for a new product. This pricing strategy is often used by companies that are launching innovative products that provide unique value to the customer. By setting a high price, they can maximize profits and recoup their development costs quickly.

Best Practices for Pricing a New Product

  • Understand your target market and their willingness to pay for your product.
  • Consider the costs of producing and marketing your product.
  • Analyze your competition and their pricing strategies.
  • Experiment with different pricing strategies to determine the best one for your product.
  • Monitor the market and adjust your pricing strategy as needed.

Conclusion

Pricing a new product can be a challenging task for marketers, but by using the right pricing strategy and following best practices, they can set the right price and maximize profits. Cost-based pricing, value-based pricing, competitor-based pricing, penetration pricing, and skimming pricing are some of the most common pricing strategies used by marketers. By understanding the target market, costs, competition, and experimenting with pricing strategies, marketers can find the best pricing strategy for their new product.

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Product and Brand Management

1 Product Management Basic Concepts

  1. Product Management – Meaning and Scope
  2. Product Management: An Overview
  3. What is a Product?
  4. Product Classification, Differentiation
  5. Product and Brand Relationships, Product and Brand Systems
  6. Product Planning
  7. Role and Responsibilities of a Product Manager

2 Product Life Cycle (PLC)

  1. Product Life cycles Implications of Product life cycle
  2. Product Life Cycle (PLC) an aid to Product Planning
  3. Operationalising the Product Life Cycle
  4. Product Life Cycle as a Guideline for Marketing Strategy
  5. Product Life Cycle as a Guideline for framing Market Share Strategy
  6. Summary of PLC Objectives, Characteristics and Strategies
  7. Evidence and Critique for the Life Cycle Concept
  8. The Diffusion of Innovation Theory – A Parallel theory

3 Product Line Decisions

  1. Product Line Analysis
  2. Product Line Extension
  3. The Disadvantages of Line Extension
  4. Factors Influencing Product Line Decisions
  5. Category Factors Influencing Product Line Decisions

4 Product Portfolio

  1. The Portfolio Concept
  2. The Logic of Portfolio Approach
  3. Types of Display Matrices
  4. The BCG Growth-Share Matrix
  5. GE’s Strategic Business Planning Grid
  6. Shell’s Directional Policy Matrix
  7. PIMS Model
  8. Arthur D Little Co. Matrix Model
  9. Hofer’s Market Evolution
  10. Utility of Display Matrices

5 Organizing for New Product Development

  1. Setting Responsibility for New Product Development
  2. Structural Units for New Product Development
  3. Function of the New Product Development Units

6 Generation, Screening and Development of New Product Ideas

  1. Innovation and the New Product Development Process
  2. Generation of New Product Ideas
  3. Sources of New Product Ideas
  4. Methods of Generating New Product Ideas
  5. Screening of New Product Ideas
  6. Criteria for Screening New Product Ideas
  7. Development of New Product Ideas

7 Concept Development Testing and Physical Development of the Product

  1. Introduction to Concept Development
  2. New Product Development
  3. Business plan: A tool to fetch financial assistance for new product development program

8 New Product Launch

  1. Types of New Products
  2. New Product Launch the Marketing Plan
  3. Defining and Selecting the Target Market
  4. Product Strategy and Positioning
  5. Pricing the New Product
  6. Promotion of the New Product

9 Branding Concepts and Evolution

  1. Branding
  2. Strategic Relevance of Branding
  3. Branding Policy Decisions
  4. Brand Name
  5. Brand Name Selection Process
  6. How to Build a Brand?
  7. Brand Image
  8. Branding of Commodities

10 Brand Equity

  1. The Concept of Brand Equity
  2. Measurements of Brand Equity
  3. Composite Measure of Brand Equity
  4. Customer Based Brand Equity
  5. How Brand Equity is created?
  6. Building Brand Equity

11 Brand Building Blocks: Identify, Image and Positioning

  1. Introduction to Brand Building
  2. Brand Building Blocks

12 Brand Architecture and Brand Extension

  1. Developing a Brand architecture strategy
  2. Brand Architecture guidelines
  3. Brand Portfolios
  4. Rationalizing the Brand Portfolio
  5. Brand Hierarchies
  6. Levels of Brand Hierarchy
  7. Brand Hierarchy Decisions
  8. Corporate Branding
  9. Brand Extensions
  10. Types of Brand Extension
  11. Advantages and Disadvantages of Brand Extension
  12. Launching a Brand Extension

13 Enhancing Brand Equity

  1. Brand foundation-authenticity and believability

14 Managing Brands Over Time and Across Geographies

  1. Expanding to International Markets
  2. Global Marketing: Standardized vs Customized Approach
  3. Planning the Global Marketing Strategy
  4. Factors Impacting Customization
  5. Developing the Global Branding Strategy
  6. Managing Brands Over Time
  7. Levers for Sustaining Brand Value
  8. Augmenting the Brand Offering
  9. The Pricing and Distribution Levers
  10. The Communication Lever

15 Measuring Brand Equity

  1. Measuring Elements of Brand Equity
  2. Frameworks for Brand Equity Measurement
  3. Brand Report Card
  4. Need for Brand Valuation
  5. Methods of Brand Valuation