XYZ Corp, a leading technology company, is introducing a revolutionary new product to the market. The product is expected to disrupt the industry with its innovative features and superior performance. However, the market already has established competitors with loyal customer bases. The company's marketing team has conducted extensive market research and identified three distinct customer segments with varying preferences and willingness to pay: Innovators: These customers are early adopters of new technology and are willing to pay a premium for cutting-edge features. They represent approximately 15% of the total market. Pragmatists: These customers value functionality and reliability over advanced features. They are price-sensitive and typically compare prices before making a purchase decision. They represent approximately 50% of the total market. Conservatives: These customers are risk-averse and prefer well-established brands with a proven track record. They are willing to pay a premium for brand reputation and trust. They represent approximately 35% of the total market. To maximize profits and capture market share, XYZ Corp needs to develop a pricing strategy that appeals to each customer segment while maintaining profitability. How can XYZ Corp approach its pricing decisions for the new product? Provide a detailed explanation of the pricing strategy, including pricing tiers, pricing models, and any other relevant considerations.

Principles Of Marketing

17th Edition

ISBN:9780134492513

Author:Kotler, Philip, Armstrong, Gary (gary M.)

Publisher:Kotler, Philip, Armstrong, Gary (gary M.)

Chapter1: Marketing: Creating Customer Value And Engagement

Section: Chapter Questions

Problem 1.1DQ

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XYZ Corp, a leading technology company, is introducing a revolutionary new product to the market. The product is expected to disrupt the industry with its innovative features and superior performance. However, the market already has established competitors with loyal customer bases. The company's marketing team has conducted extensive market research and identified three distinct customer segments with varying preferences and willingness to pay: Innovators: These customers are early adopters of new technology and are willing to pay a premium for cutting-edge features. They represent approximately 15% of the total market. Pragmatists: These customers value functionality and reliability over advanced features. They are price-sensitive and typically compare prices before making a purchase decision. They represent approximately 50% of the total market. Conservatives: These customers are risk-averse and prefer well-established brands with a proven track record. They are willing to pay a premium for brand reputation and trust. They represent approximately 35% of the total market. To maximize profits and capture market share, XYZ Corp needs to develop a pricing strategy that appeals to each customer segment while maintaining profitability. How can XYZ Corp approach its pricing decisions for the new product? Provide a detailed explanation of the pricing strategy, including pricing tiers, pricing models, and any other relevant considerations.

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