A skimming strategy is appropriate when:

Question

Quizplus · Accepted Answer

A skimming strategy is most appropriate when the firm has a distinct and innovative new product in a monopoly period. It involves setting a high price initially to maximize profits before competitors enter the market. The high price also helps to communicate the product's value to early adopters who are willing to pay a premium price. This strategy is not suitable when there is high price elasticity of demand or a strong threat of imminent competition as it may lead to a loss of market share and lower profits in the long run.

A Skimming Strategy Is Appropriate When