Skimming

• What is price skimming?

  Setting a high price then lowering it
• In which market are tech products commonly using price skimming?

  Smartphone market
• Why do companies use price skimming?

  To maximize profits from early adopters
• What type of consumers are targeted first in price skimming?

  Early adopters
• What is the relationship between price skimming and price elasticity of demand?

  Targets inelastic demand first, then elastic
• How does price skimming create a sense of aura around a product?

  By initially setting a high price
• What is essential to implement price skimming successfully?

  Conducting market research
• Why is segmentation important in price skimming?

  To determine different income brackets' willingness to pay
• How can an integrated marketing mix support price skimming?

  By combining promotion with pricing strategy
• What is a risk of price skimming related to price-sensitive customers?

  Annoying and losing those customers
• What is a potential risk from rivals in price skimming?

  Rivals may undercut your prices
• When is it appropriate to use price skimming?

  When being the first mover in the market
• What must be monitored during the gradual price lowering phase?

  Rivals' pricing strategies
• What are the key steps in implementing price skimming successfully?

  • Conduct market research
  • Gauge consumer demand
  • Determine willingness to pay
  • Segment consumers by income
  • Use an integrated marketing mix
  • Monitor rivals' pricing strategies