As the product manager for Whirlpool’s line of washing machines, you are in charge of pricing new products. Your product team has developed a revolutionary new washing machine that... As the product manager for Whirlpool’s line of washing machines, you are in charge of pricing new products. Your product team has developed a revolutionary new washing machine that relies on radically new technology and requires very little water to get clothes clean. This technology will likely be difficult for your competition to copy. Should you adopt a skimming or a penetration pricing strategy? Justify your answer.
Understand the Problem
The question is asking for a pricing strategy recommendation (skimming or penetration) for a new washing machine with innovative technology. It requires an analysis of the advantages and disadvantages of each strategy in the context of the competitive landscape and the unique features of the product.
Answer
Skimming pricing strategy
Skimming pricing strategy should be adopted.
Answer for screen readers
Skimming pricing strategy should be adopted.
More Information
Since the new washing machine uses revolutionary technology that is difficult for competitors to copy, a skimming pricing strategy allows Whirlpool to capitalize on its unique offerings by setting a high initial price. This strategy helps recover research and development costs quickly and maximizes profit margins from early adopters willing to pay for innovative features.
Tips
A common mistake is to adopt a penetration pricing strategy, which might not fully capitalize on the product's unique attributes and could reduce perceived value.
Sources
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