GTB Electronics enters a new market and needs to set its pricing strategy for the market.Which of the following is a favorable condition for implementing skim pricing?
A)There is little differentiation between competing products in the market.
B)The market has many well-established competitors.
C)Entry into that particular market is difficult.
D)There are many substitute products available,with a wide range of prices and features.
E)GTB's product position is about the same as competitors' positions in every area of product and service quality.

Question

Quizplus · Accepted Answer

Skim pricing is effective when the entry into the market is difficult. This allows the company to charge a higher price and earn higher profits before competitors enter the market. The other options do not support implementing skim pricing. A) Little differentiation between competing products would create intense price competition, making it difficult to charge a premium price. B) Many well-established competitors would also create intense price competition, making it difficult to charge a premium price. D) Many substitute products available with a wide range of prices and features would make it difficult to charge a premium price. E) GTB's product position being about the same as competitors would not provide an advantage in implementing skim pricing.

GTB Electronics Enters a New Market and Needs to Set