Photo AI
A business has developed a product new to the market - HSC - SSCE Business Studies - Question 19 - 2010 - Paper 1
Question 19
A business has developed a product new to the market. It wishes to maximise the profit per item sold. Which pricing strategy should it use? (A) Loss-leader (B) Pen... show full transcript
Worked Solution & Example Answer:A business has developed a product new to the market - HSC - SSCE Business Studies - Question 19 - 2010 - Paper 1
Step 1
Which pricing strategy should it use?
Answer
To maximize profit per item sold for a new product, the business should employ the Skimming pricing strategy. This approach involves setting a high initial price for the product to target early adopters willing to pay a premium. By doing so, the business can recover development costs quickly and maximize margins on each sale.
In contrast, other strategies such as loss-leader pricing aim to attract customers at a lower margin, penetration pricing focuses on capturing market share with low initial prices, and price-point strategies are more about setting standardized pricing rather than maximizing individual profits. Therefore, the best choice here is:
(D) Skimming.