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A retailer sells a new style of sunglasses at a significantly higher price for the first month they are sold - HSC - SSCE Business Studies - Question 4 - 2024 - Paper 1
Question 4
A retailer sells a new style of sunglasses at a significantly higher price for the first month they are sold. What pricing strategy is being used by the retailer? ... show full transcript
Worked Solution & Example Answer:A retailer sells a new style of sunglasses at a significantly higher price for the first month they are sold - HSC - SSCE Business Studies - Question 4 - 2024 - Paper 1
Step 1
What pricing strategy is being used by the retailer?
Answer
The pricing strategy being used by the retailer is Price Skimming.
Price skimming involves setting a high price initially and then gradually lowering it over time. This strategy is often employed for new or innovative products, allowing the retailer to maximize profits from early adopters willing to pay a premium. In this case, since the retailer sells the sunglasses at a significantly higher price for the first month, it aligns with the definition of price skimming.