Asked by Kelly Walter on Apr 24, 2024
Verified
Price skimming is when:
A) the initial product price is set low and is kept constant.
B) the initial product price is set high giving high short-term profits; then the price is slowly lowered.
C) the initial high product price is set high and raised.
D) the initial product price is set low and raised.
Price Skimming
A pricing strategy where a company charges the highest initial price that customers will pay and then lowers it over time.
Product Price
The amount of money charged for a product, determined by factors like cost of production, market demand, and competitive pricing.
Short-Term Profits
Earnings achieved within a relatively brief period, reflecting the immediate financial health of a business.
- Comprehend the distinctions and applications of various pricing strategies such as skimming, penetration, and predatory pricing.
Verified Answer
SS
Sydney SimonMay 02, 2024
Final Answer :
B
Explanation :
Price skimming involves setting a high initial price for a product in order to capture early adopters who are willing to pay a premium for the product. As demand and competition increase, the price is gradually lowered to attract more price-sensitive consumers. This strategy allows for high short-term profits but may lead to reduced demand in the long run. So, option B is the correct choice as it describes price skimming strategy accurately.
Learning Objectives
- Comprehend the distinctions and applications of various pricing strategies such as skimming, penetration, and predatory pricing.