Uncompeted product pricing strategy

Marketing

The aim of this topic is to set a price for a product that as no real competition today. The product can be a new-technology product, a product manufactured with a specific know-how.

In order to be efficient we have to look at many factors. In a first part we will analyse how does it cost to introduce a such product in the market. Then we will focus on the marketing strategy. After that, we will examine what kind of packaging we can apply. Before established a price strategy we will probe the futur potrential competition with the potentials earned royalties.

I.                  Cost

The cost of the launch of a such product should be arguably pretty high for many reasons. Firstly because the company has to start from a white page. To develop the product the company as to build some costly prototype.

Furthermore, we can’t expect to have big production on the early month of the launching. In effect, only few consumers, called “innovators”, will buy the product at the beginnig. As we know, the less than we produce the more the variable fixed cost are hight. So at the start, if the sales and so the production won’t take-off, the production cost will remained at the top.

As well, some label and patent can be required to launch the product in safe and free condidtions. This certificates are usually expensive and will be reflected on the final price.

We can only manage to compensate the above average cost of production with a relative high price.

         II.               Marketing strategy

As it is a uncompeted new product, we can say that the product is penetrating a new market. The product should be in a potentialy hefty market growth. Without any competitors we can’t establish a SWOT analysis.

However, we have to be focus on the potential market growth. The more the maket is small, the more the price will be high.

We have to keep in mind that a new product, without competitors, convey a high value image. So we need to apply a good margin to the product, and so a high price to obtain a high product quality perception.

III.           Packaging

As the product is new, it is obviously unknown. So if we need to apply an  aggressive promotion strategy with packaging wich will be able to communicate the novelty.

IV.           Competition

If we have take the safety to certificate our products with a patent we are exempt of competition during five years. However, it is possible to see the apparition of another technology able to compete our product.

So we have to be warn not to put a thoughtless price. In effect, a such price can create an opportunity for a manufacturer to develop his own technology in order to penetrate our market and compete our technology.

V.              Price setting

The price is mainly based on a value pricing startegy. That is to say that the price should be teh nearest as the customer’s percived the product value. So we have to estimate in figure and to translate it in price the advantages that our product will benefit to the customer.

To summarize, we will apply a high price, due to the cost production and in accordance with a high quality consumer perception. However, a thoughtful price will be directly tied with the consumer value perception and the benefit that he can make with.