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Question
What is skimming pricing?
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Solution
In a skimming pricing strategy, a very high price is set so that in the initial stages, the cream of demand may be skimmed, and the investment made in the product is quickly realised. The aim is to 'sell to classes' who don't care how much they pay for a novel product. Later on, the price may be reduced to tap other segments of the market. This strategy is appropriate in the case of a highly distinctive product which is aggressively promoted in the early stages of its life cycle.
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RELATED QUESTIONS
Explain the below mentioned pricing strategy:
Penetrating pricing strategy
The strategy of introducing new product in existing market is classified as ______.
______ price refers to the high initial price charged when a new product is introduced in the market.
Parity pricing is not relevant under the present marketing conditions. Justify either for or against by giving two reasons.
Give one difference between skimming pricing and penetrating pricing.
Skimming pricing policy is ideal for introducing a product in the FMCG sector. Justify for or against.
Identify two desirable conditions under penetrating pricing.
| Evergreen Cosmetics is planning to launch a new range of 'anti-wrinkle creams' in the Indian market. They conducted a market survey and found potential competition from Remain Young. Since they are targeting the higher strata of society, the cream is being priced much higher than their competitors. They plan to use the television as a media to advertise this anti-wrinkle cream as opposed to print media which is largely used by them for their other products. Officials at Evergreen Cosmetics feel that with the correct style of promotion, they could easily be successful in the market. |
- Identify and explain the pricing strategy that is being used by Evergreen Cosmetics.
- Describe any two qualities that a salesman selling this product should possess.
- Explain any two tools of sales promotion that can be used here.
What pricing strategy will be used to launch a high-end smartphone?
Discuss the pros of Penetrating Pricing Policy.
