Question

Which of the following should be true for a skimming price to be successful?

A) Target consumers should be price sensitive.
B) Supply should exceed demand.
C) Demand must be stabilizing.
D) The producer should use intensive distribution.
E) There should be little chance that competitors can quickly enter the market.

Answer 1

A skimming price strategy is successful when target consumers are price sensitive, there is little chance of quick competitors entering the market, and the demand for the product is stabilizing.

Step-by-step explanation:

A skimming price strategy is a pricing strategy where a high price is initially set for a new product, and then gradually lowered over time.

For this strategy to be successful, there are several conditions that should be true:

1. Target consumers should be price sensitive: Skimming prices are most effective when the target market is willing to pay a higher price for the product due to its perceived value or uniqueness.
2. There should be little chance that competitors can quickly enter the market: Skimming prices can be easily undercut by competitors if they can quickly enter the market and offer a similar product at a lower price.
3. Demand must be stabilizing: Skimming prices work best when there is a stable demand for the product, rather than a rapidly changing or declining demand.