Market-skimming prices make sense under which of the following conditions?
A) The unit costs of producing a small number of units is low.
B) The average price communicates average value.
C) The product is a "me-too" and contains no new technology or points of difference.
D) An insufficient number of buyers have a high current demand.
E) The high initial price blocks competition from entering the market

Question

Quizplus · Accepted Answer

Market-skimming prices are typically set for new products with unique features or benefits that allow for higher prices in the short term. The high initial price blocks competition from entering the market, giving the company a chance to maximize profits before others can enter with lower-priced alternatives. This strategy only makes sense if there is a limited number of buyers with high current demand, and the cost of producing a small number of units is not prohibitively high. Average price communicating average value and "me-too" products with no unique features do not warrant market-skimming prices.

Market-Skimming Prices Make Sense Under Which of the Following Conditions