Discussion Board – Price Skimming Price skimming strategy is a new product strategy that results in...

Discussion Board – Price Skimming

Price skimming strategy is a new product strategy that results in a high initial product price being reduced over time as demand at the higher price is satisfied. Research product or service that may have entered the market with a high initial price and now the demand at the higher price is satisfied. Discuss why you believe consumer demand has changed for this product or service which resulted in satisfaction of the market.

Expert Solution

The product in case is the mobile communication service introduced some twenty years ago. During that time, the mobile instruments s well as the subscription service was forbiddingly expensive. One needed to pay for even receiving the call, that too at a rate which was three to four times higher than the landline telephone call tariff. The mobile sets were also expensive, with even the basic, cheapest one retailing for around $180. The early adopters were well to do customers, businessmen and executives of big organisations who needed to be in touch wth people at all times. The skimming price was a result of fewer competitors and high operating costs. Once the economies of scale helped the companies ( both set makers and service providers) to cut down on costs, more and more customers ( who now found it within their range of affordability) joined the system, which now is defined by very high competition and razor thin margins, owing to very high number of subscribers, making per unit cost very small, as well as technological development which work together to ensure that the market is satisfied to greater extent.

keosha answered 2 years ago

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