• Price Skimming
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Pricing - Elements of pricing
Do you use a price
skimming strategy or a
penetration pricing
strategy?
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Pricing - Demand-based pricing
Demand-based pricing is any pricing
method that uses consumer demand based on perceived value - as the central
element. These include price skimming,
price discrimination and yield
management, price points, psychological
pricing, bundle pricing, penetration pricing,
price lining, value-based pricing, geo and
premium pricing.
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Business ethics - Sales and marketing
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Marketing ethics involves pricing practices,
including illegal actions such as price
fixing and legal actions including price
discrimination and price skimming also the
main two issues of pricing involve
overprice and price markups and
markdowns which may lead to a
monopolistic position, force (seller), or
ignorance on behalf of the buyer
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Business practice - Sales and marketing
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Marketing ethics involves pricing practices,
including illegal actions such as price fixing
and legal actions including price
discrimination and price skimming. Certain
promotional activities have drawn fire,
including greenwashing, bait and switch,
shilling, viral marketing, spam (electronic),
pyramid schemes and multi-level marketing.
Advertising has raised objections about
attack ads, subliminal messages, sex in
advertising and marketing in schools.
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Bribery - Forms of bribery
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Many types of bribes exist: gratuity|tip, gift,
sop, Employee benefit|perk, Price
skimming|skim, favor, discounts and
allowances|discount, waived fee/ticket, free
food, free ad, free trip, free tickets,
sweetheart deal, Kickback
(bribery)|kickback/payback, funding, inflated
sale of an object or property, lucrative
contract, donation, campaign contribution,
fundraiser, sponsorship/backing, higher
paying job, stock options, secret commission,
or promotion (rank)|promotion (rise of
position/rank)
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Aggressiveness strategy - Prospector strategy
They value being the first in an industry,
thinking that their “first mover advantage” will
provide them with premium pricing
opportunities and high margins. Price
skimming is a common way of recapturing
the cost of development. They can be
opportunistic in recruiter|headhunting key
employees, both technical and managerial.
Advertising, sales promotions, and
sales|personal selling costs are a high
percentage of sales.
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Competitor analysis - Media scanning
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It might also indicate a new pricing|pricing
strategy such as penetration
pricing|penetration, price discrimination,
price skimming, product bundling, joint
product pricing, discounts, or loss leaders
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Penetration pricing - Motivation
* There is not enough
demand amongst
consumers to make price
skimming work.
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Market skimming
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'Price skimming' is a pricing|pricing strategy
in which a marketing|marketer sets a
relatively high price for a product
(business)|product or Service
(economics)|service at first, then lowers the
price over time. It is a temporal version of
price discrimination|price discrimination/yield
management. It allows the firm to recover its
sunk costs quickly before competition steps
in and lowers the Market (economics)|market
price.
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Market skimming
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Price skimming is sometimes referred to
as riding down the demand curve. The
objective of a price skimming strategy is to
capture the consumer surplus. If this is
done successfully, then theoretically no
customer will pay less for the product than
the maximum they are willing to pay. In
practice, it is almost impossible for a firm
to capture all of this surplus.
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Market skimming
* Price skimming is a product pricing
strategy by which a firm charges the
highest initial price that customers will pay.
As the demand of the first customers is
satisfied, the firm lowers the price to
attract another, more price-sensitive
segment.
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Market skimming - Limitations of price skimming
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Price skimming can be considered either a
form of price discrimination or a form of
yield management
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Market skimming - Reasons for price skimming
Price skimming occurs in mostly
technological markets as firms set a high
price during the first stage of the Product
lifecycle (marketing)|product life cycle. The
top segment of the market which are
willing to pay the highest price are
skimmed of first. When the product enters
maturity the price is then gradually
lowered.
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