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Question
Give one difference between skimming pricing and penetrating pricing.
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Solution
| Sr. No. | Basis of Distinction | Skimming Pricing | Penetrating Pricing |
| 1. | Initial Launch Price | Set at an exceptionally high level at launch. | Set at an aggressively low level at launch. |
| 2. | Primary Objective | To skim the cream of the market and maximize short-term profits. | To capture a large market share and build a deep customer base quickly. |
| 3. | Target Audience | Premium buyers and early adopters who value novelty over price. | Mass market and highly price-sensitive consumers. |
| 4. | Market Nature | Suitable for unique, innovative products with little immediate competition. | Suitable for highly competitive markets with many close substitutes. |
| 5. | Subsequent Pricing Trend | Prices are gradually lowered as competition enters. | Prices are gradually raised once market dominance is secure. |
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