TPO8-Q6

My speaking text

The professor explains two different strategies of determining initial prices for the products by the companies. First, the company sets the price high which is followed by a lower price at later stages because high priced products are believed as high quality ones, such as cell phones, video cameras and the like. In this strategy, the companies can make a lot of profit. Although the customers know that the price will decrease, they pay higher prices because they want to get the product sooner. Secondly, the price is set low to compete with the existing companies and brands and is used in saturated markets. In this strategy, the manufacturers make profit by encouraging the customers to buy the other accessories produced by them, like printers and software in computer companies.

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