Which of the following are conditions to apply Skimming Pricing? A) The market must be highly price sensitive. B) The product's quality and image must support its higher price and... Which of the following are conditions to apply Skimming Pricing? A) The market must be highly price sensitive. B) The product's quality and image must support its higher price and enough buyers must want the product at that price. C) The cost of producing a smaller volume cannot be so high that they cancel the advantage of charging more. D) Competitors should not be able to enter the market easily and undercut the high price.
Understand the Problem
The question is asking about the conditions necessary for implementing skimming pricing, which involves setting a high price initially and then lowering it over time. Each option presents a potential condition that could be evaluated for relevance to skimming pricing strategy.
Answer
B, C, D
The conditions to apply Skimming Pricing are: B) The product's quality and image must support its higher price and enough buyers must want the product at that price. C) The cost of producing a smaller volume cannot be so high that they cancel the advantage of charging more. D) Competitors should not be able to enter the market easily and undercut the high price.
Answer for screen readers
The conditions to apply Skimming Pricing are: B) The product's quality and image must support its higher price and enough buyers must want the product at that price. C) The cost of producing a smaller volume cannot be so high that they cancel the advantage of charging more. D) Competitors should not be able to enter the market easily and undercut the high price.
More Information
Skimming pricing is often used for innovative new products and involves setting high initial prices to maximize revenue from segments willing to pay a high price before progressively lowering the price.
Tips
A common mistake is assuming that the market must be highly price sensitive for skimming pricing. It's actually the opposite; skimming works when customers are less sensitive to the price.
Sources
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