Question

The iPod is a very popular item among people of all ages. The demand is continuing to grow. The iPod's introductory price was around $300, but it is now down to $199.00 for the basic model. As the price has dropped, sales have increased. Which pricing strategy was used for iPod?

Answer 1

Price Skimming

Step-by-step explanation:

Price Skimming is a strategy used whereby a producer initially charges the highest price that consumers would be willing and able to pay. As demand starts to fall from the high consumer segments, the price is lowered to tap into a new group of consumers.

In this case, the initial price charged was $300 and gradually reduced to $199 to capture those individuals who could not afford (or were not willing and able to pay) such a high price for an iPod.