Your company is about to introduce a new product that will increase the fuel mil

Question

Your company is about to introduce a new product that will increase the fuel mileage on ANY gasoline-powered car by 25%. This is a genuine product that REALLY works and has received endorsements left and right as a tool to help America become less dependent on foreign oil. Utilizing the micropulverization capabilities of electronic frequency distribution, the GasEnhance device will take an automobile that gets 28 mpg and allow it to get 25% more mileage; that is, 35mpg. It REALLY works! Your cost to manufacture this product is $115.00 and installation (which is easy) requires about one hour, or about $60 for labor. What Kotler pricing strategy will you use, knowing that your competition has a similar product that will likely use a slightly different technology and that will be out in 120 days? Rumor has it that their product will provide 35% more mileage.

Explanation / Answer

Since this is a novel fuel saving product and the competitor will take 120days to come of with similar product ( which is quite long) , I propose a market skimming pricing to maximize the profits. After the competitor product is available in the market , I will follow a competitive pricing strategy i.e. a price lower than the competitors pricing considering the fact that they give 35% mileage improvement compared to ours 25%.

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