Determination process of a product, Marketing Management

Determination process:

Estimating the demand for the product: the first step in determining the price of a new product is to estimate the anticipated demand of the product. However the anticipation of the demand for a new product is an uphill task but still it can be estimated taking into account the two factors:

1.       Estimated price, and

2.       Estimated demand of the product at the different price level. Estimated price can be anticipated on the basis of the relative importance of the product to the consumers in their budget estimates. The estimate of the demand at different price levels can be fixed on the basis elasticity of the demand of the product. If the demand is elastic, the prices may be fixed lower on in the case of inelastic demand, prices may be higher.

Anticipating competition: having estimated the demand of the product, competitive situation in the present and in future should also be studied. Estimating the future competitive situation is more important in fields where production of the product can be started with low initial capital and efforts and the profit margin is quite attractive. In such cases, future competition may be very server. The study of the competition should be made with the two angles:

1.       Competition from the producers of similar product, and

2.       Competition from the substitutes of the product. Reactions and activities of both types of competitions should be made extensively.

Determining expected share of market: the next step will be to determine the market share which a company will try to capture. It depends on various factors such as present production capacity, cost of extension programmes, cost of the production and completion, etc. the market share should not be fixed beyond the production capacity of the plant.

Selecting a suitable price strategy: keeping in view the business objectives in mind, a suitable price strategy should be selected. There are various price strategies to be adopted such as.

1.       Skimming the cream pricing strategy,

2.       Low penetration  pricing strategy,

3.       Discouraging potential strategy

4.       Follow the competition, etc. each strategy possesses its own merits and demerits. The firm is to select any one of the strategy.

Posted Date: 9/19/2012 7:01:43 AM | Location : United States







Related Discussions:- Determination process of a product, Assignment Help, Ask Question on Determination process of a product, Get Answer, Expert's Help, Determination process of a product Discussions

Write discussion on Determination process of a product
Your posts are moderated
Related Questions
Many service sector businesses fail because their marketing managers do not have any experience in the marketing of services. They often have been previously involved in the mark

Question 1: Why are relationship marketing (RM) and specifically customer relationship management (CRM) appropriate for Orange in managing its marketing efforts? Question

Q. Explain briefly Social, ethical, legal& economical aspect of advertising. Answer: - Social aspect of advertising- Advertising affects a variety of aspects of social and cult

What are the advantages of product development

Problem 1: Define the term motivation and describe Maslow's contribution to motivation. Problem 2: (a) Discuss the needs and requirements for Market segmentation? (b

What is marketing? a. B uilding customer value and satisfaction are at the very heart of current marketing thinking and practice. b. A very easy definition of marketing

Question (a) ‘'Corporate identity has become a universal technique for promoting companies and improving corporate culture. ‘' Explain what you understand by: (i) Corporat

SWOT Analysis is a strategic planning method used to assess the internal & external environment in which a company operates and competes. Internal environmental factors are classif

Tata Motors recently introduced the nano,the world''s least expensive car for the indian market.Can Tata succeed in targeting both the very low end of the auto market as well as th

What are the requirements to make finished goods for consumers? All needs to make finished goods for consumers are as given below: i. Installations: For producing any prod