Samsung management decided to use skimming as a pricing strategy for its newest line of high-definition television (HDTV) sets. It should be aware that this strategy does not
A)generate capital to cover research and development costs.
B)discourage competitors from entering the market.
C)provide flexibility in the introductory base price.
D)protect the firm from covering costs if prices are set too low.
E)reduce the stress that may be placed on the firm's production capabilities.

Question

Quizplus · Accepted Answer

Skimming pricing involves setting high initial prices to maximize profits from early adopters, which can attract competitors to enter the market due to the high margins, rather than discouraging them.

Samsung Management Decided to Use Skimming as a Pricing Strategy