Marketing A new device \"Sniffer\", used for testing alcohol levels in drunken d
ID: 2746323 • Letter: M
Question
Marketing
A new device "Sniffer", used for testing alcohol levels in drunken driving suspects, is priced out of the reach of most law enforcement units. Those units that have bought the Sniffer are extremely pleased with its results and the fact that these results are readily accepted in court. There is nothing on the market today that has the accuracy and the portability of the Sniffer. Discuss the firm's pricing strategy. What are the conditions that must be n place to use this type of pricing policy. Is this the type of policy you would recommend for Sniffer? Why or why not?
Explanation / Answer
This is a monopsony market where the buyer is the law enforcement unit. These units are bulkly purchased at the centre by ministry, who is responsible for the enforcement of law. Since their number is very large and we want to sell our product in a monopsony as well as monopoly market, we have go for lobbying. A huge amount has to spend on it. We can charge considerably high charges on it until a new competitior is coming. The price should enough high as to pay lobbying expense as well to gain ealry comer advantage. The best pricing policy is SKIMMING PRICING, we can think about reducing it until a competitior comes.