Question

Please explain the Marketing pricing strategies of Skimming and Penetration Pricing

Answer 1

skimming pricing

'"Skimming pricing is used when a product, which is new in the market or just launched, is sold at a relatively high price because of its uniqueness, benefits to customers or its current Wow factor. However, slowly but surely when the product gets older in the market, then the price is dropped and the product is brought at competitive pricing. Skimming price is mostly used for technological products where the product demand is not consistent. The typical product which is launched with a skimming price strategy is unique to the market, has customers who are ready to pay a premium for the product, and is far ahead from the competition."'

Penetration pricing

Penetration strategy is the practice of setting an initial price much lower than the eventual standard price. This strategy essentially represents a price war, going for the deepest possible price cuts and aiming for your price to always be the lowest on the market. Penetration pricing can bring new customers into your store, increasing market share and building customer loyalty. Customers who are looking for the best bargain will switch their loyalty to you if you can entice them with the lowest prices. This strategy works best during a product's growth phase, since the product already has a positive reputation.