Assignment. Product deelopment Assignment Example | Topics and Well Written Essays - 750 words

. Product deelopment - Assignment Example The companies are retailers in freshly brewed coffee and are using status/prestige pricing, market penetration pricing, and market pricing strategy. They include Starbucks, McDonald’s, and Dunkin’ Donuts respectively1. Status/prestige involves setting prices higher than the competition in order to create a perception of an added advantage of the product that creates a reputational quality and distinction. Market penetration pricing involves offering a product/service at a lower price to attract customers from those offering the same product at a higher price. On the other hand, market strategies considers various things before setting the price, but mainly evaluating prices of similar products in the market. It can set prices higher than the competition if it deems it has more features or less if the features are less. Starbucks has been a master of employing value-based pricing to maximize profits. It does this by using research and customer analysis to formulate targeted price increases that capture the greatest amount consumers can will to pay without driving them off. The company does profit maximization by determining the price and product output level that generates most profit2. As has been implied through market penetration strategy, McDonald’s is after the mass market by offering lowest, on average, prices compared to the other two. This strategy is intended to create traffic large enough to cover all cost incurred, including selling cheaply per latte. Lastly, Dunkin’ Donuts prices its products in comparison to the two (market strategy) by offering similar-featured coffee to that of Starbucks and better than McDonald’s3. By using this strategy, its hopes to undercut and win Starbucks’ customers for the same features and offer better features to McDonald’ s customers, hence enough margin. The three coffee shops have different minimum order quantity (MOQ) that will enable each to make reach their marginal