Multiple choice

A manufacturer of a consumer product keeps the price of a new product substantially high and over a time period reduces it when the demand reduces. Such pricing is called

  1. geographical pricing

  2. promotional pricing

  3. market skimming pricing

  4. psychological pricing

Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

Market skimming pricing or price skimming is a product pricing strategy by which a firm charges the highest initial price that customers will pay. As the demand of the first customers is satisfied, the firm lowers the price to attract another, more price-sensitive segment.