Pricing Decisions for New Products: QwikDry Diaper Rash Spray and 'This and That' bag
1. Introduction
The introduction of a new product in the market is always accompanied by a lot of marketing decisions that need to be made in order to ensure the success of the product. One of the most important aspects of launching a new product is pricing the product correctly. The wrong pricing decision can lead to the failure of the product even if the product itself is good. This is because the wrong pricing decision can send out the wrong message about the product to consumers and it can also make the product unappealing to potential customers.
In this paper, we will be critically evaluating the pricing decisions of two new commodities, QwikDry Diaper Rash Spray and 'This and That' bag. We will be looking at their respective pricing objectives and assessing whether or not their prices are in line with these objectives. We will also be considering who their target consumers are and what role skimming might play in the pricing of these new products.
2. QwikDry Diaper Rash Spray
QwikDry Diaper Rash Spray is a new product that has been launched in the market by the company Burt's Bees. The spray is designed to provide relief from diaper rash and it can be used on both cloth and disposable diapers. The spray is priced at $9.99 for a 4-oz bottle.
When looking at the price of QwikDry Diaper Rash Spray, it is evident that the company has used a skimming strategy. This is because the price of the product is relatively high when compared to other similar products that are available in the market. For example, another popular diaper rash spray called Desitin Rapid Relief Cream is priced at $7.49 for a 4-oz bottle. This means that QwikDry Diaper Rash Spray is around 33% more expensive than Desitin Rapid Relief Cream.
It is clear from this comparison that Burt's Bees has positioned QwikDry Diaper Rash Spray as a premium product. This is likely because the company feels that its target consumers are willing to pay more for a quality product that they feel confident in using on their babies' skin. In addition, QwikDry Diaper Rash Spray comes in a much nicer packaging than Desitin Rapid Relief Cream and this also contributes to its premium image.
3. 'This and That' bag
'This and That' bag is a new reusable shopping bag that has been launched by the supermarket chain Whole Foods Market. The bag is made from recycled materials and it features a design that makes it easy to fold up and store away when not in use. The price of 'This and That' bag is $1.99.
When considering the price of 'This and That' bag, it is evident that Whole Foods Market has used a penetration pricing strategy. This is because the price of the bag is relatively low when compared to other similar products that are available in the market. For example, another popular reusable shopping bag called ChicoBag Reusable Shopping Bag is priced at $6.99. This means that 'This and That' bag is around 71% cheaper than ChicoBag Reusable Shopping Bag.
It is clear from this comparison that Whole Foods Market has positioned 'This and That' bag as a budget-friendly option. This is likely because the company feels that its target consumers are price-sensitive and they are more likely to purchase a product if it is seen as good value for money. In addition, 'This and That' bag is likely to appeal to consumers who are looking to reduce their use of plastic bags and this could also be a factor in its pricing.
4. Pricing objectives
As we have seen, the pricing of QwikDry Diaper Rash Spray and 'This and That' bag has been carefully considered by their respective companies. In both cases, the prices of the products are in line with the companies' overall pricing objectives.
The main pricing objective of Burt's Bees is to maximise profits. This is evident from the fact that QwikDry Diaper Rash Spray has been priced at a premium level. By positioning the product as a premium offering, Burt's Bees is able to charge a higher price and this results in increased profits for the company.
The main pricing objective of Whole Foods Market is to increase sales volume. This is evident from the fact that 'This and That' bag has been priced at a budget-friendly level. By positioning the product as an affordable option, Whole Foods Market is able to increase sales volume and this results in increased profits for the company.
5. Who are the consumers?
The pricing of QwikDry Diaper Rash Spray and 'This and That' bag has been heavily influenced by their respective target consumers. As we have seen, QwikDry Diaper Rash Spray has been positioned as a premium product and this is because its target consumers are parents who are willing to pay more for a quality product that they feel confident in using on their babies' skin. 'This and That' bag has been positioned as a budget-friendly option and this is because its target consumers are price-sensitive shoppers who are looking for a reusable bag that is good value for money.
6. What is the role of skimming in the pricing of these new products?
Skimming plays an important role in the pricing of both QwikDry Diaper Rash Spray and 'This and That' bag. As we have seen, QwikDry Diaper Rash Spray has been priced at a premium level and this is because its target consumers are willing to pay more for a quality product. By using a skimming strategy, Burt's Bees is able to maximise profits from QwikDry Diaper Rash Spray by targeting consumers who are willing to pay a higher price. 'This and That' bag has been priced at a budget-friendly level and this is because its target consumers are price-sensitive shoppers. By using a skimming strategy, Whole Foods Market is able to increase sales volume from 'This and That' bag by targeting consumers who are looking for a good value option.
7. Takeaway
In conclusion, it is evident that the pricing of QwikDry Diaper Rash Spray and 'This and That' bag has been carefully considered by their respective companies. The prices of both products are in line with the companies' overall pricing objectives and they are also reflective of the target consumers for each product. Skimming plays an important role in the pricing of both products and this is likely to continue to be the case in the future.