A skimming pricing policy is likely to be most effective when
A)consumers perceive one product to be similar to other products on the market.
B)a lower price will significantly lower fixed costs.
C)competitors will be attracted to the market due to the potential for high sales revenues.
D)consumers tend to be price-sensitive.
E)the high initial price will not attract competitors.

Question

Quizplus · Accepted Answer

A skimming pricing policy involves initially setting a high price for a new product with unique features or benefits, often because there are no close substitutes or because early adopters are willing to pay a premium price. This pricing strategy is most effective when there is no immediate competition in the market, and the high price does not attract competitors to introduce substitute products with lower prices. Therefore, option (E) is the best choice, while options (A), (B), (C), and (D) are less relevant or contradictory to the conditions that favor a skimming pricing policy.

A Skimming Pricing Policy Is Likely to Be Most Effective