publication . Article . 1986

New Product Pricing in Quality Sensitive Markets

Stephen A. Smith;
Open Access
  • Published: 01 Jan 1986 Journal: Marketing Science, volume 5, issue 1, pages 70-87
Abstract
This paper considers the problem of pricing a new product in a market having competing products of different qualities and market penetration levels, as measured by the cumulative number of units sold. Each customer type selects his optimal product based on maximizing consumer surplus. Pricing policies for a new product are determined for the seller based on cumulative profit maximization without discounting. An example is solved in detail for two demand function forms.
Subjects
free text keywords: pricing, new product entry, quality differentiation, Marketing, Business and International Management, Market penetration, Microeconomics, Demand curve, Economic surplus, New product development, business.industry, business, Economics, Discounting, Profit maximization
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