A skimming pricing policy is likely to be most effective when: (1)lowering the price has only a minor effect on increasing sales volume and reducing unit costs; (2)when the high initial price does not attract competitors; (3)customers interpret high price as signifying high quality; and (4)__________.
A)enough customers are willing to buy immediately at the high initial price
B)consumers tend to be price sensitive
C)it will be easier to set measurable sales unit goals
D)a lower price will significantly reduce unit costs
E)consumers perceive your product to be similar to other products on the market

Question

Quizplus · Accepted Answer

A skimming pricing policy is most effective when enough customers are willing to buy the product immediately at the high initial price. This allows the company to maximize profits before competitors enter the market and also signals to customers that the product is exclusive and high-quality. Lowering the price may not have a significant impact on increasing sales volume or reducing unit costs, so the initial high price is necessary to generate profits. Consumers may or may not be price-sensitive, but in the case of skimming pricing, the focus is on attracting customers who are willing to pay a premium price for a perceived premium product. If consumers perceive the product to be similar to other products on the market, skimming pricing may not be as effective.

A Skimming Pricing Policy Is Likely to Be Most Effective