Which of the following statements pertaining to a market skimming pricing strategy is not true?
Which of the following statements pertaining to a market skimming pricing strategy is not true?
Market skimming pricing strategy aims to maximize profits by setting high initial prices that decrease over time as the market expands. This approach is effective when buyers are less sensitive to prices, perceive higher prices as an indicator of higher quality, and when market capacity is insufficient with competitors unable to enhance it. However, it is not favored when unit costs decrease with increased production since the strategy benefits more from maintaining high prices initially rather than reducing them due to lower production costs.
A skimming strategy sets an initial high price and then slowly lowers the price to make the product available to a wider market. The question is asking which one of the options is NOT true, and since the rest of the options (B,C & D) “could” be true, in terms of relating it to the definition of the skimming strategy, then A is NOT TRUE.. which is what the question (at face value) is asking. Hope this helps!
explain please
first you take advantage of being innovative or with better marketing, so you put higher margin with lower production. When competitors appear on the market, you lower price, taking advantage of higher demand and your growing in time production
all other options favors price skimming , hence we are left with only option A . i don't know the logic behind option A
It is because unit cost does not fall with an increase in units produced but rather to take advantage of the next type of customers remember under market skimming customers perceive a high cost product to be of a better quality