Complete question reads;
Sterling Morrow, a fashion brand known for casual dresses, is launching a new product line: Carry Tu, a line of women's fashion bags. The Carry Tu line will include a satchel, an overnight bag, a laptop bag, and a card-holder keychain. The Carry Tu line will compete with Grazzi, a popular brand of bags.
The sale of women's bags has seen an uptick in recent years. Consumers are willing to spend discretionary money, if they see good value for the money. As a junior marketing strategist, you must recommend to the marketing team the appropriate pricing strategies for each of Carry Tu's bags. The pricing strategies must allow you to make a profit while still competing successfully with Grazzi. Your tasks include determining the target market and selecting appropriate pricing strategies for each of the product items in Carry Tu's line of bags.
The first product item that you must recommend a pricing strategy for is the satchel. The satchel will be the first of the Carry Tu bags to hit the market.
Which of the following market-entry pricing strategies do you recommend? Select an option from the choices below:
a. Market penetration pricing strategy: Setting the price very low initially
b. Market skimming pricing strategy: Setting the price very high initially
<u>Answer</u>:
<u>a. Market penetration pricing strategy: Setting the price very low initially</u>
<u>Explanation</u>:
Remember, we are told there's already a competitor with this line of bags; Grazzi which likely has a higher market share. Thus, a market penetration pricing strategy would be more effective as consumers in this market are price sensitive especially for new products. Lowering the initial price of the satchel bags than what is available in the market would be a very good and effective strategy to penetrate the market.
