Companies facing the challenge of setting prices for the first time can choose between two broad strategies: market-penetration pricing and ________.
A) comparative pricing
B) competitive pricing
C) market-skimming pricing
D) market-segmentation pricing
E) cost-plus pricing

Question

Quizplus · Accepted Answer

Market-skimming pricing is the strategy of setting a high initial price to "skim" revenue layers from the market. This strategy is typically used for innovative products with significant differentiation and limited competition. It allows the company to earn high profits initially before competitors enter the market and prices start to fall. This strategy is often used to recoup development costs quickly. Market-penetration pricing is the strategy of setting a low initial price to attract a large number of buyers quickly and win a large market share. This strategy is typically used for products with high production volumes and low marginal costs. Therefore, market-skimming pricing is the best choice for companies facing the challenge of setting prices for the first time.

Companies Facing the Challenge of Setting Prices for the First