Natural Well, a local supplier of natural bottled water, initially sold its product at a premium price of $4 because the company believed consumers would view the bottled water as a prestige item. The company decided that when startup costs had been fully recovered and competition became imminent, the company would reduce the price to a more reasonable $1. Natural Well is implementing a
A) variable pricing strategy.
B) skimming price strategy.
C) penetration pricing strategy.
D) price lining strategy.

Question

Quizplus · Accepted Answer

Natural Well is using a skimming price strategy by initially setting a high price to recover costs and then lowering it as competition increases.

Natural Well, a Local Supplier of Natural Bottled Water, Initially