Page 396 - PM Integrated Workbook 2018-19
P. 396
Chapter 15
Example 3
What products may be priced using a market-skimming strategy?
Market skimming is often used in relation to electronic products when a new
range (e.g. a new iPhone, a new laptop range with new functionality) are first
released onto the market at a high price.
The target is the ‘early adopters’ of such products; their price sensitivity is
relatively low because their interest in the product is substantial or they have a
stronger appreciation of the qualities offered by the products.
Example 4
A company has entered two different new markets. In market A, it is initially
charging low prices so as to gain rapid market share while demand is
relatively elastic. In market B, it is initially charging high prices so as to earn
maximum profits while demand is relatively inelastic.
Which price strategy is the company using in each market?
Penetration pricing is charged in market A and price skimming in market B.
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