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Pricing Decision

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Pricing Decision Price is an amount of money which is used for exchanging for a product or service. For this new product, our pricing objective is to build market share which the purposes are keeps a small margin but gives the most value to the customers. Therefore, we would like to use penetration pricing to enter the India market. The reason we chooses penetration pricing strategy is because we are introducing a cost-saving electric bicycle with entirely new design and technology with no initial competition since we are the first launching in India market to use the idea of electric bicycle with the combination of motorbike plus bicycle. Thus, our main objective is to compete against our competitors which are bicycle and motorbike and grab market share from them. In addition, we can also capture large number of customers in the short period of time and boost up our sales volume as well. Nowadays, majority of the India consumers are more education and knowledgeable. ...read more.


On the other hand, the price of electrical bicycle is reasonable for those customers which having a high purchasing power to buy it. We decided to give discount to the retailers to ensure our product could penetrate into the market in a short period of time. The discount rate is based on the demand of the product that retailers need to supply to the customers. This is because cost-plus pricing often works well for our business that keeps its cost low, allowing us to set our prices which is lower than our competitors and still make profit. No doubt, we have large economies of scale that produce a large volume of production with a lower production cost. In general, we will choose two ways to increase the demand of our product. Firstly, use advertisement to enhance the product's image. Secondly, give some promotion such as rebate or coupon to attract them aware about our new launching product. ...read more.


in a weak-currency country we can choose to cut export prices to increase our market share or maintain our prices. Due to deal with this problem, MNCs will use the flexible cost-plus method to reduce prices in response to unfavorable currency swings. This is an example of a market holding strategy, it means that MNCs need to adopt in this strategy in order to not lose the market share. There are three different types of global pricing alternatives which is extension or ethnocentric pricing, adaptation or polycentric pricing, and geocentric pricing. In MNCs, we are choosing extension or ethnocentric pricing policy. It means the cost per-unit price of electric bicycle is to be the same around the world. This is easily for us to standardize the price and deal with the currency fluctuation as well. Refer back to the table 1 which is our product selling price is same in these three countries. In short, penetration pricing is giving a direct influence toward the product demand and also generate the customers purchasing rate. Thus, MNCs need to understand the frequent changes of currency and competitors' reaction that will affect our sales volume and demand. ...read more.

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