Which of the following observations about the impact of product considerations on pricing is true?
A) A penetration policy should be used when the firm expects minimal competition for a product.
B) A skimming policy provides best returns for perishable products as they approach being no longer fit for sale.
C) A penetration policy is commonly used for products that are highly distinctive in customers' minds.
D) A skimming policy is useful when the firm has a temporary monopoly and when demand for the product is price inelastic.

Question

Quizplus · Accepted Answer

A skimming policy is one in which the seller charges a relatively high price on a new product while a penetration policy is one in which the seller charges a relatively low price on a new product. Generally, a skimming policy is used when the firm has a temporary monopoly and when demand for the product is price inelastic.

Which of the Following Observations About the Impact of Product