Troy Bourbon, a local bourbon distillery, initially sold its product at a premium price of R45 because the company believed consumers would view the bourbon as a prestige item.The company decided that when start-up costs had been fully recovered and competition became imminent, the company would reduce the price to R30 which was more expected in the market.The distillery is using a:
A)variable pricing strategy.
B)skimming price strategy.
C)price lining strategy.
D)penetration pricing strategy.

Question

Quizplus · Accepted Answer

The distillery is using a skimming price strategy, which involves setting a high initial price to recover costs and then lowering it as competition increases.

Troy Bourbon, a Local Bourbon Distillery, Initially Sold Its Product