Stevens Outdoor Furniture has just introduced a new line of products in the southeastern United States. Owner James Bilby discovered the new line, which includes outdoor furniture and other lawn items, on a recent vacation to California. The market is extremely promising because none of his main competitors stocks this type of furniture. He’s concerned, however, about pricing because shipping costs will drive his prices higher than those charged by stores closer to the manufacturer’s West Coast factory. Initial promotion and advertising costs, as well as warehousing expenses, are also on Bilby’s mind. He’s called a teleconference with his ten store managers to develop a pricing strategy that must take effect immediately.
-It appears that,at this point,penetration pricing is Bilby's best strategy.

Question

Quizplus · Accepted Answer

Penetration pricing, which involves setting lower prices to enter a competitive market, may not be the best strategy for Bilby since his costs are higher due to shipping, warehousing, and initial promotion. Instead, a value-based or skimming pricing strategy might be more appropriate to cover the higher costs and position the furniture as unique or premium compared to competitors.

Stevens Outdoor Furniture Has Just Introduced a New Line of Products