A skimming pricing policy is likely to be most effective when
A) consumers perceive the company's product to be similar to other products on the market.
B) a lower price will significantly lower fixed costs.
C) the company's product is easily and quickly duplicated.
D) consumers tend to be price-sensitive.
E) the high initial price will not attract competitors.

Question

Quizplus · Accepted Answer

Skimming pricing strategy involves setting a high initial price for a product, and gradually lowering it over time. This strategy is effective when there are no or few competitors in the market, as a high price will not attract competitors who may undercut the price. Therefore, option E is the best choice. Options A, B, C, and D are not necessarily true for a skimming pricing strategy. Option A assumes that there are other similar products on the market, which may not always be the case. Option B assumes that a lower price will significantly lower fixed costs, which may not be true for all products. Option C assumes that the company's product is easily and quickly duplicated, which may not be applicable in all situations. Option D assumes that consumers are price-sensitive, which may not always be the case. Therefore, option E is the best choice.

A Skimming Pricing Policy Is Likely to Be Most Effective