Which of the following is true of product considerations in pricing?
A) A penetration policy is generally used when the firm expects minimal competition for a product.
B) A skimming policy is generally used when the firm expects competition to move in rapidly.
C) A penetration policy cannot be used to obtain large economies of scale.
D) A skimming policy is useful when demand for the product is price inelastic.

Question

Quizplus · Accepted Answer

A skimming policy is useful when demand for the product is price inelastic. This means that customers are willing to pay a high price for the product regardless of its cost. A skimming policy involves setting a high price initially to capture this demand before competitors enter the market. This strategy is not effective if there is a high likelihood of new competitors entering the market soon.

Which of the Following Is True of Product Considerations in Pricing