A skimming pricing policy is likely to be most effective when
A)consumers perceive your product to be similar to other products on the market.
B)a lower price will have a major effect on reducing unit costs.
C)competitors will be attracted to the market due to the potential for high sales revenues.
D)consumers tend to be price sensitive.
E)a high initial price will not attract competitors.

Question

Quizplus · Accepted Answer

Skimming pricing policy is effective when the product has unique features that make it stand out in the competition and when the market is not highly price-sensitive. Setting a high initial price helps to recover the cost of research and development, and it also gives an impression of high quality and exclusivity. This high price also acts as a barrier to entry, reducing the number of competitors in the market. Hence, the skimming pricing policy is effective when a high initial price will not attract many competitors.

A Skimming Pricing Policy Is Likely to Be Most Effective