![]() is one in which a low initial price is set. In contrast to a skimming approach, a penetration pricing strategy A strategy in which an organization offers a low initial price on a product so that it captures as much market share as possible. ![]() Over time, the price of the product goes down as competitors enter the market and more consumers are willing to purchase the offering. Price skimming is a pricing approach designed to skim that top part of the gravy, or the top of the market. When the gravy is chilled, the fat rises to the top and is often “skimmed” off before serving. The easy way to remember a skimming approach is to think of the turkey gravy at Thanksgiving. This way, a company recoups its investment in the product faster. The idea is to go after consumers who are willing to pay a high price (top of the market) and buy products early. is when a company sets a high initial price for a product. The idea is to target buyers who are willing to pay a high price (top of the market) and buy products early. As mentioned in Chapter 7 "Developing and Managing Offerings", a skimming price strategy A strategy whereby a company sets a high initial price for a product. The same is true for DVD players, LCD televisions, digital cameras, and many high-tech products. Since then, the price has dropped considerably even for new models. Remember when the iPhone was first introduced, its price was almost $700. Think of products that have been introduced in the last decade and how products were priced when they first entered the market.
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