A firm uses ________ when it charges a high,premium price for a new product with the intention of reducing the price in the future.
A) market-skimming pricing
B) target costing
C) deceptive pricing
D) market-penetration pricing
E) predatory pricing

Question

Quizplus · Accepted Answer

Market-skimming pricing involves setting a high price for a new product in the market with the intention of attracting the more price-insensitive early adopters who eagerly want to have the latest product. The firm intends to recover sunk development costs quickly and profit handsomely from a relatively small percentage of the market before the competition catches up. Such firms might gradually reduce the price to attract more price-sensitive consumers.

A Firm Uses ________ When It Charges a High,premium Price