ECONOMICS
MARKETS AND PRICES
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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There is a lot of competition in a market
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Its products are aimed at customers with a low income
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It launches a new, innovative product onto the market
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When a product is of a low quality compared to its competitors
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Detailed explanation-1: -Price skimming involves charging a relatively high price for a short time when a new, innovative, or much-improved product is launched onto a market. The company then lowers the product’s price when demand declines and the market becomes saturated.
Detailed explanation-2: -Price skimming Companies use price skimming when they are introducing innovative new products that have no competition. They charge a high price at first, then lower it over time. Think of televisions.
Detailed explanation-3: -Price skimming is a product pricing strategy by which a firm charges the highest initial price that customers will pay and then lowers it over time.
Detailed explanation-4: -Skim pricing, also known as price skimming, is a pricing strategy that sets new product prices high and subsequently lowers them as competitors enter the market. Skim pricing is the opposite of penetration pricing, which prices newly launched products low to build a big customer base at the outset.
Detailed explanation-5: -Penetration pricing is a marketing strategy used by businesses to attract customers to a new product or service by offering a lower price during its initial offering. The lower price helps a new product or service penetrate the market and attract customers away from competitors.