New Product Pricing strategies

New Product Pricing/Pricing strategies

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Introduction

The main reason as to why a marketer comes up with a product is so as to satisfy some particular need in the society. The producers thus intend to fill a particular gap in the market place by producing a particular good and at the same time make profits. Setting a price for this product is a very important task as price has to meet the balance between the utility of the product to a buyer and at the same time ensure that the seller gains a profit. This paper will explain the introduction of dietax meal free cholesterol takeaway boxes into the market, the market segmentation for the product, the target market as well as the pricing strategies. The product lifecycle will also be taken into consideration and the prices that will be charged at the different stages.

a) Product

Dietax is an already packaged takeaway meal that is new in the market and it is cholesterol free so as to cater for the needs of those consumers who want to live healthy by eating healthy. The main ingredients in this takeaway meal are raw foods that make it non perishable and thus making it to even be on the shelves and fridges of the supermarket as well as the retail shops. These raw foods including some varieties of vegetables and fresh vitamins and cereals

b) Market segmentation

Market segmentation requires that a producer should know their customers well as well as ensuring that the customers get exactly what they desire from the product (Art, 2004).Art (2004) emphasizes that the process also involves an establishment of strong relationships with the co marketing partners and in a nutshell he defines it as the process in which he a marketer partitions his market into customers who have similar needs thus their consumer behavior is similar or almost similar. In the case of dietax whole packaged meal market segmentation is developed so as to reach the various market segments. The method used for dietax whole meal market segmentation is benefit segmentation (Charles, W., Joseph, F and Carl, M., 2008).This sort of segmentation groups the customers according to the benefit which they derive from the consumption of a product. This group of people is the ones seeking for a nutritious diet without any artificial ingredients out of will or even doctor’s prescription. This particular clientele is derived form people who watch a healthy nutritional intake and at the same time they lack enough or appropriate time to prepare their own meals. This could arise due to their busy schedules that would render it inconvenient for them to do their meals and thus they buy.

c) The benefit market segmentation was arrived at as a method of market segmentation because the target market is composed of people who have similar needs to cut on their calories and to live healthy.

d) Target market

The niche market has been identified by use of psychographics which refers to a group of people who have similar lifestyles attitudes and values as far as diet intake is concerned. As earlier noted the dietax whole meal is free from cholesterol and is also rich in nutrients which are also balanced to ensure that the packaged meal meets all the diet requirements of those people who consume it.

The niche market therefore consists of the following classes of people;

The elderly people who are interested in the consumption of healthy meals and they may not make it to prepare their own meals. Research by the marketing team prior to the production of the dietax meal revealed that there is a large number of elderly people between the age of 60 to 80 years who would like to consume healthy meals but they also they are not in the constant behavior of preparing these meals in their homes.

The people who are suffering from maladies such as blood pressure problems or diabetes and are under the doctor’s prescription of consuming only healthy meals also forms a target market for the dietax whole meal.

Obese adolescent kids who are attempting to watch their weight and are thus on the lookout for the healthy meals and any other obese person attempting to cut down their weight.

Any other person who would like to eat healthy and thus maintain a healthy look and also live long.

e) This product has the benefit of being rich in nutrients and still low in cholesterol thus ensuring that the product is beneficial to the target market by helping them eat and live healthy.

f) The introductory price for dietax is $3.50 per package.

g) The pricing strategy that is used is skimming so as to recover the production costs incurred for the product and thus make it profitable. Skimming shall accomplish the objective of capturing a profit margin that is high and also in achieving an objective of recapturing the production costs.

h) The product is worth this price for the different costs that are have been incurred in the research prior to its production and also to recover the production cost as well as ensure that the producer makes a profit after the sales.

i) The prices charged at the different stages of production are

3.50$ at introduction stage which is relatively high so as to make high profit

3.00$ at the growth stage. The price is reduced so as to capture more customers in the market. At this stage the distribution is also more intense and the discounts are also reduced.

2.75$ is charged at the maturity stage in response to the rising competition from people producing similar products. At this stage incentives are offered so as to make sure competitive products will not drive product out of market,

2.75$ the prices are maintained at this stage as the niche market still identifies with the product and makes high purchases.

Conclusion

The dietax whole meal product as newly introduced in the market has to be promoted and brought to the doorposts of the clientele and this will be especially necessary especially in the initial stages of its production. The product is introduced using the skimming pricing strategy so as to recover the costs that are incurred especially during the research process. This price is reduced slightly after the introduction stage of the product so as to ensure that the price is favorable and also so that it competes effectively with the competing products. The product will also keep undergoing innovations so as to ensure that it meets the standards that are expected and thus maintain the loyalty of the customers.

References

Art, W. (2004) Handbook of market segmentation: strategic targeting for business and technology firms. Chicago. Probus Publishing Co.

Charles,W.,Joseph,F.&Carl.M.(2009) Marketing.USA. Cengage Learning

Malcom, M &Ian, D (2004) Market segmentation: how to do it, how to benefit from it. Oxford. Elsevier Butterworth-Heinemann.

Walter,L., Michael,V &Craig,C (2010)The price advantage USA McKinsey and Company

William, M., Robert, J. &Jack, R. (2009) Business.USA. Cengage learning.