Vi - Pricing, what strategies are normally used to market this product?

The SodaStream is a new product trying to penetrate an existing market with high entry barriers that prevents new products from entering the market. As mentioned before, there are many competitors and alternatives for soda making machines, so in order for soda making products to enter the market and compete with the existing soda making companies, pricing strategies have to be adopted.

The penetration pricing strategy is an option that should be taken into consideration.
This strategy consists mainly on artificially setting a lower price in order to attract new consumers and increase demand, it would help the company to gain market share and compete with the already existing products and alternatives. In order to acquire the soda making machine, an initial investment cost of around $80-$100 is needed. Reducing the price of the soda making machine would attract more consumers willing to spend their money on the product. Once this is achieved, the price of the refills, flavors and other consumables for the machine can be increased to regain the costs, which it increases the marginal price per soda. For consumers who consider the soda making machine a high involvement product, demand would be lower since in order to recover the initial investment in the machine by saving money from a lower marginal cost compared to pre-packaged soda would take longer. When aiming at the sector of consumers who the soda making machine represents a high involvement process, marginal costs per home-made soda have to be reduced, it includes decreasing the price of the flavors, carbonators and other consumables. On the other hand, SodaStream would attract consumers who consider this a low involvement product due to a lower initial investment in the machine.

Promotional pricing is a common approach that attracts