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. Due to the advance technology, consumers can easily compare the prices by using website. As the result, most of the consumers will focus on the perceived value of the product they received. Therefore, electric bicycle can fulfill their needs and wants. For example, teenagers which are age 15 – 20. They are more likely to have outdoor activities and focus on their own behavior lifestyle. Parents will buy for them because of this product is worth to it. It has features of light, mirror, comfortable saddle, and so forth. Besides, we use cost-plus pricing methods to add standard markup to the cost of our product in order to obtain our new product’s price. Price x Units Sold = Total Revenue. The price of our product will be set at a price which everyone could purchase it which is $450 equal to approximately 20061.0 Indian Rupee (INR). We use market penetration to set a low initial price in order for our product to enter the market so that we can attract a large number of buyers. On the other hand, the price of electrical bicycle is reasonable for those customers which having a high purchasing power to buy it.

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         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 ...

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