ENTREPRENEURIAL MARKETING
PRICING STRATEGIES
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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An initially high price charged to customer which will reduce over time
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An initially low price charged to customer which will increase over time
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A steady price charged to customer regardless of product age
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None of the above
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Detailed explanation-1: -What is Price Skimming? Price skimming, also known as skim pricing, is a pricing strategy in which a firm charges a high initial price and then gradually lowers the price to attract more price-sensitive customers. The pricing strategy is usually used by a first mover who faces little to no competition.
Detailed explanation-2: -Price skimming and penetration pricing are two opposing long-term strategies. Price skimming consists of setting high prices and reducing them over time in order to maximize profit in the long term, while penetration pricing consists of setting low prices and increasing them over time.
Detailed explanation-3: -Price skimming is a pricing strategy used by companies to charge a high initial price for a new product and then gradually lower the price to attract more price-sensitive customers and increase overall sales volume. Price skimming aims to ‘skim’ customers willing to pay a premium price for a product.
Detailed explanation-4: -Premium pricing: high price is used as a defining criterion. Such pricing strategies work in segments and industries where a strong competitive advantage exists for the company.