Pricing and Milo

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2.2 Pricing Strategy
2.2.1 Factors affecting pricing decisions
Milo is considered as a product of monopolistic competition market because there are many competitors of Milo in the market. Some of the competitors include Vico, Ovaltine, Horlicks, Dutch Lady and Nutrilite. Secondly, monopolistic competition market has free market entry and exit. This means that new competitors can enter the market easily and Milo may be easily force out of the market by its competitors. Monopolistic competition also needs a lot of money to spend on advertising to convince customers to buy their products. In fact, Milo sells all its products throughout the world and higher popularity compared to other chocolate drinks. According to the research, loyal customer purchase the product based on its brand and quality. Milo also have the power to set their own prices. They will be more alert when setting the price, because their product price is elasticity to the demand. 2.2.2 New Product Pricing Strategies

Nestle Malaysia practicing penetration pricing to market Milo which is away where Nestle charges a relatively low price for a product (Milo) initially as a way to reach the mass market. When Milo has decided the product price, they will choose a good pricing strategy that will give them direction of price movements over the Product Life Cycle. Milo need to aware about higher price. If they set higher price, they have to produce a good quality of Milo. Besides, the competitors also will influence the pricing strategy. For example, if Milo introduces a new product that same with competitors, the price will be restricted and close to the price of competitors. Unless, Nestle Milo can differentiate and convince consumers, they can set the higher price for the product. 2.2.3 Product Mix Pricing Strategies

Milo is using product line pricing which is a pricing strategy that uses one product with various class distinctions. A line can comprise related products of various sizes, types,...
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