The manufacturer of a DVD-R is thinking of using a skimming pricing strategy for its new product.Which of the following conditions would argue against using a skimming pricing strategy for the DVD-R disks?
A)large potential market, even at a high price
B)technological problems still exist for competitors
C)increasing volume reduces production costs substantially
D)consumers perceive a price-quality relationship
E)consumers are innovators

Question

Quizplus · Accepted Answer

Skimming pricing strategy is employed when a new and innovative product is launched in the market, and the manufacturer sets a high price initially to gain maximum profit from the early adopters who are willing to pay a premium price for the product. However, this strategy is not suitable when the increasing volume reduces production costs significantly. In such a scenario, skimming pricing will result in the loss of potential profits that can be obtained by capturing a larger market share. Therefore, option C argues against using a skimming pricing strategy for DVD-R disks.

The Manufacturer of a DVD-R Is Thinking of Using a Skimming