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Compare penetration pricing with skimming pricing. - Scottish Highers Business Management - Question c - 2022
Question c
Compare penetration pricing with skimming pricing.
Worked Solution & Example Answer:Compare penetration pricing with skimming pricing. - Scottish Highers Business Management - Question c - 2022
Step 1
Compare penetration pricing
Answer
Penetration pricing is a strategy where the product is introduced at a low price to attract a large number of customers. This approach aims to gain market share quickly, enticing consumers to switch from their existing brands and creating a customer base for the new product. It is often used in highly competitive markets.
Step 2
Compare skimming pricing
Answer
In contrast, skimming pricing involves introducing the product at a high price, which may later be decreased. This strategy is useful in markets with little or no competition, allowing the business to maximize profits from early adopters before competitors enter the market. Both strategies are considered short-term pricing tactics used for newly launched products.