Introducing a new product

There are three main objectives that must be met in cnsidering the price for a new product

1. Getting the product accepted. A customer will not spend money on an unknown product unless the price has perceived acceptance
2. Maintaining market share as competition grows. Once a successful product has competition in the market, the firm must reappraise the product’s price in conjunction with advertising and promotion techniques
3. Earning a profit. It is much easier to lower the price than to increase it once the product is on the market.

The small business manager has three essential strategies to select from in establishing a new product’s price:

1. Penetration Pricing Strategy
2. Skimming Pricing Strategy
3. Sliding-down-the-demand-curve strategy