A company uses skimming pricing as an objective when it desires to reach a market segment that is relatively price insensitive and thus willing to pay a premium price for the value received.

Question

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Skimming pricing is a strategy in which a company sets a high price for a new product or service in order to target a market segment that is relatively price insensitive and willing to pay a premium price for the value received. As the product becomes more established in the market, the company may gradually lower the price to attract more price-sensitive customers.

A Company Uses Skimming Pricing as an Objective When It