106. Companies bringing out a new product can choose between two broad strategies: market-skimmingpricing and market-penetrationpricing. Distinguish between the two.
Market skimming is used to skim revenues layer by layer from the market by entering the market with high initial prices. The...
The introductory stage is especially challenging. Companies brining out a new product face the challenge of setting prices for the first time. They can choose between two broad strategies: Market-skimmingpricing and market penetrationpricing
a) Market-SkimmingPricing;- Many...
pricing is the pricing technique of setting a relatively low initial entry price, usually lower than the intended established price, to attract new customers. The strategy aims to encourage customers to switch to the new product because of the lower price.
Penetrationpricing is most commonly...
customers, business must lower their prices after sales start to decline over the life cycle of the product.
Prestige pricing closely resembles price skimming concerning high product prices. The differencebetween the two pricingstrategies is brand reputation and life cycle pricing...
required in terms of organizational objectives, demand for the product, customer value perception, buyer price sensitivity, the price of competitive offering, and direct variable costs. The company has two alternatives to price this system, either the skimmingpricingstrategy or the penetration...
ANS: a. market-skimmingpricing
2. Price differencesbetween product line items are known as ____________.
a. price steps
b. price bundles
c. price marks
d. price breaks
e. price percentages...
skimming, discount pricing, product life cycle pricing and even competitive pricing.
Different Types of PricingStrategiesPenetrationPricing
A small company that uses penetrationpricing typically sets a low price for its product or service in hopes of building market share, which is the...
available to global marketers.
The three strategies discussed in the chapter are market skimming, penetrationpricing, and market holding or status quo pricing. Market skimming is appropriate in the introductory phase of the product life cycle if there is little competition or few acceptable...
a short term.
This pricing method could be used by Sealed Air in conjunction with the penetrationpricing method that was used on the sales and marketing strategy of the speedy packer unit, and the price skimming method on the sales of the products and consumables used by the speedy packer unit to...
marketing strategy that deals with the pricing of a product. Normally used on new high end products, the producer will set high prices for them. The main reason or market skimming to make as much revenue as possible before a substitute product hits the market. After a competitor arrives in the market...
– Market Share – Return on investment
• They must then develop strategies to achieve those objectives
– PenetrationPricing – Market Skimming
• Market Skimming
– Charging a premium price – May occur at the introduction stage of product life cycle
Chapter 11 Key Terms:
Market-skimmingpricing (price skimming) - Setting a high price for a new product to skim maximum revenues layer by layer from the segments willing to pay the high price; the company makes fewer but more profitable sales.
Market-penetrationpricing - Setting a low...
1 (a) State the main differencebetween a skimmingpricingstrategy and a penetrationpricingstrategy. 
A penetrationpricingstrategy is a technique which involves setting a relatively low price initial entry price to attract customers and gain a...
betweenskimming and penetrationpricing is that skimmingpricing results in much slower acceptance of a new product, but higher unit profits and penetrationpricing results in greater initial sales volume, but lower unit profits.
Psychological – This will make the customer think that for example, if...
and image dilution in customer's minds are key disadvantages of penetrationpricing.
Demand (Skimming) pricing is a strategy in which a marketer sets a relatively high price for a product/service at first, and then lowers the price over time. It is a temporal version of price discrimination...
penetrationpricing or high skim pricing
* Place: distribution is selective
* Promotion: aimed to innovators and early adopters; to build customer awareness and education
Growth Stage :
* Sales increase
* New competitors enter the market
* Profits increase
Marketing Mix Strategies...
selecting an objective. Definitions of some pricingstrategies (Figure 02) follow.
* PenetrationPricingPenetrationpricing involves pricing the product relatively low compared to similar goods in the hope that it will secure wide market acceptance that will allow the company to raise its price...
. They can choose between two broad strategies. What are these two
a. product mix strategies and pricing mix strategies
b. product line pricing and captive-product pricing
c. market-skimmingpricing and market-penetrationpricing
There are many ways in which the price of a product can be determined. The following are the foremost strategies that businesses are likely to use.
1 Competition-based pricing
2 Cost-plus pricing
3 Creaming or skimming
4 Limit pricing
5 Loss leader
6 Market-oriented pricing...
6. Other environmental factors.
• Discussing the Concepts:
Explain the differencesbetween value-based pricing and cost-based pricing.
Value-based: Offering just the right combination of quality and good service at a fair price. Vary directly with the level...