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No matter how good the product is, it is unlikely to succeed unless the price strategy is crorectly made. But this does not just mean that one should always be cheaper than its competitors. Most people associate a higher price with quality. As a rule, a producer of luxury or medical products will use skim pricing or premium pricing initially, in order to maximize its profits. For fast moving consumable goods like colas, penetration pricing is usually used. The firm will want a large share of the market, so will settle for a small profit on each item. In the long term, they hope that the turnover, and therefore their profits, will be high. The simplest method of all is cost-plus pricing, where a firm adds a profit mark-up to the unit cost.(english is poor)

Analysis of the existing pricing strategy:

The Star Company has produced many kinds of intelligence toys for children. Its pricing method is cost-plus pricing, because of the large sales volume and low cost of manufacture, the Star Company always gains a high profit. The price of these toys are relatively lower than those of other enterprise.

Pricing strategy of the new product:

To decide on the pricing strategy of the Magic Lighting UFO, the following steps were followed.

•Estimate the demand curve. There is a relationship between price and quantity demanded. The total cities’ population in China is about 350,000,000. The population of potential customer is about 9 percent of total population. If only one percent of them buy our toy, the consumer number is 315,000.

•Calculate costs. The total unit cost of the new adult toy is 35 Yuan.

•Environmental factors. The price control of government prohibits pricing the new product too high.#8226;Pricing Objectives. The objective in the introduction stage is Maximize quantity. This means to seek to maximize the number of units sold or the number of customers in order to decrease long-term costs and increase long-term profits.

Considering the costs, the effects of competition and the customer`s perception of value, and other more subjective criterias such as customer preferences, product benefits, convenience, product quality, and alternative products offered by the competition, the unified unit price of the Magic Lightning UFO should be 78 Yuan.

Alternative Options:

Skim pricing: Skim pricing is a strategy which is used to pursue the objective of profit margin maximization. In order to attract some consumers who have strong interests in the new toy and are not highly price sensitive, this options can be adopted.

Place strategy is associated with channels of distribution that serves as the means by which the company can get its products to the target consumers. The distribution system performs such functions as transactional, logistical, and facilitating products. Distribution decision includes market coverage, channel member selection, logistics, and level of service.

Analysis of the existing distribution strategy:

The Star Company has already made a huge distribution net of toys. It takes the indir本论文由英语论文网提供整理，提供论文代写，英语论文代写，代写论文，代写英语论文，代写留学生论文，代写英文论文，留学生论文代写相关核心关键词搜索。