Discussion
Skimming Price Strategy is appropriate when ..................... .
Answer: D
Skimming pricing is appropriate when the Product is new and innovative.
Price skimming means launching at a high price to 'skim the cream' from buyers who value the novelty most, and then lowering the price step by step to reach more price-sensitive segments. It works when the product is new and distinctive, so that there is no close substitute and early adopters will pay a premium, as with new technology products.
When customers are sensitive to price, or competition is normal, the right strategy is penetration pricing. Option C points the same way as skimming, but the key takes the classic condition for skimming, a new and innovative product, as the answer.
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