Question

The pen market in india is around rs. 700 crores and 60 to 65 % of the market belongs to ball pens. Growth is in the range of 20 % annually. The ‘x' brand created a kind of revolution by bringing in an offering priced higher than a number of competing brands and also offered greater reliability and superior flow. The brand is a market leader. ‘y' was a follower brand priced below ‘x' and it has become a 50 crore brand. The brand also provided a ‘secondary' differentiation by introducing a number of colours.Examine the product and pricing strategies for the above situation and its relevance.

Answer 1

Ok, here is the answer,X followed Value based pricing: Pricing a product based on the perceived value and not on any other factor. Pricing based on the demand for a specific product would have a likely change in the market place.

Y followed X. So they basically adopt the following pricing.
Penetration Pricing : Setting the price low in order to attract customers and gain market share. The price will be raised later once this market share is gained