Pricing Strategies : Price Skimming 1.3.3
Price Skimming - Charging a premium price when a product is first launched in order to maximise revenue per unit. The product can be sold in different market segments at different times. The top segment is skimmed off first with the highest price. Example : Apple IPhone or any other electrical device Early Adopters - People who are prepared to pay the highest price to have the latest product or service on the market Objective : Maximise profit per unit to achieve quick recovery of development costs. Works well for products that create excitement amongst " EARLY ADOPTERS ". Or for products that are new and face little or no competition. This is type of pricing strategy is typically used in the introduction stage of the product life cycle. DRAWBACKS 1) CANNOT LAST FOR LONG Price Skimming as a strategy cannot last for long as competitors will soon launch rival products that put pressure on the price. 2) DISTRIBUTION CAN BE A CHALLENGE Distribution (P...