For Blank______ pricing to be effective, there must be sufficient customers willing to buy the product at the high initial price, they should interpret that high price as signifying high quality, and that high price should not attract competition.

Question

For Blank______ pricing to be effective, there must be sufficient customers willing to buy the product at the high initial price, they should interpret that high price as signifying high quality, and that high price should not attract competition.
Multiple choice question.

loss leader

penetration

skimming

experience curve

GPT-4o mini · Answer

The correct answer is **skimming**. Skimming pricing involves setting a high initial price for a product to maximize revenues from customers willing to pay that price, typically under the assumption that they perceive the product as high quality, and this strategy relies on limited competition in the early stages.