Currently reduction of price with the second

Currently we hold a great amount of pricing freedom for our product. Since the  artificial intelligence market only consist of a few major players, creating an oligarchy, Amazon has a great amount of freedom when pricing the product. We also realize the market position we are in and have studies that show Amazon and its Echo products with a 76 percent U.S. market share, compared to 24 percent for Google and its Google Home device (Soper, 2017). With over three fourths command over the market, we have more power over the price we set for our product. We want set a fair price that attracts and satisfies our consumers, stays competitive, but also measures the true value of the product itself. A great example of this would be our Echo Dot, priced at $29.99 available through Amazon online and in other retail stores. The next cheapest AI enabled products would be the Google Mini also priced at $29.99, but is of lower quality as said by many product reviews. Given our current status within the market and superior quality of product, we would say that our price freedom is quite high. A main constraint would be the fact that these products are seen as more of a luxury item. Consumers do not see them as necessities, they are seen as an item of status. This is an external constraint because these are luxury items, causing consumers to set an amount on what they would pay for these smart speakers.The price strategy that has been used for Amazon’s products has been price skimming. Price skimming is when a new product is introduced into the market and is sold initially at a high price. Companies make the most money off the early adopters and overtime they drop the prices as new competition enters the market. Dropping the price also allows price sensitive consumers to adopt the product as well. If we look at the Echos history we would see the same strategy with the first generation Echos priced at $189, gradually we have seen the reduction of price with the second generation ($79) and the Echo Dot ($29.99). We see price skimming as a very effective way to price these products because it gives the consumer what they want, while also staying competitive.I would recommend that Amazon continue with their price skimming strategy because it is a proven method within the market and has exposed more potential consumers to their products. I might also recommend that they try price bundling near the introduction of the next generation Echo. Price bundling allows amazon to bundle older products and sell them together, this allows them to move more product and clear inventory space for new products.