Question

Skimming pricing refers to

a. setting the lowest initial price possible when introducing a new or innovative product in order to "skim" sales from competitors.
b. setting a low initial price on a new product to appeal immediately to the mass market.
c. setting the highest initial price that customers who really desire the product are willing to pay.
d. the practice of replacing promotional allowances with higher manufacturer list prices.

Answer 1

The correct answer is Option C.

Step-by-step explanation:

Skimming pricing derived its name from "skimming" customer segments with price being reduced over a time period or "skimming" successive layers of a cream.

Skimming is a product pricing strategy whereby the highest initial prices are set for customers who will pay and the prices are reduced over time as competition enters the market. In order to attract further customers, the firms reduce the prices over time.