Which of the following is true of price skimming?
A) It is effective in situations in which competitors are able to undercut prices easily.
B) It can be profitably used when the product's quality and image support its price.
C) It involves underpricing products so that companies make larger sales.
D) It is ineffective in situations in which competitors are unable to enter the market easily.
E) It leads to a situation in which the company completes more, though less profitable, sales.

Question

Quizplus · Accepted Answer

Price skimming involves setting a high price initially and then gradually lowering it as competition enters the market. This strategy works best when the product has a strong quality and image that supports the high price. It is not effective when competitors can easily undercut prices or when they cannot enter the market easily. The goal of price skimming is to make fewer sales but at a higher profit margin.

Which of the Following Is True of Price Skimming