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regarding a question in the acca study hub

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA PM Exams › regarding a question in the acca study hub

  • This topic has 1 reply, 2 voices, and was last updated 1 year ago by LMR1006.
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  • May 9, 2024 at 9:15 am #705136
    Uzmaan
    Participant
    • Topics: 14
    • Replies: 20
    • ☆

    Which of the following statements about market skimming pricing are true?

    It is appropriate when the price sensitivity of demand is unknown.
    It is likely to discourage competitors from entering the market.
    It is useful when launching a product into a competitive market.

    sir, my doubt is that when skimming is introduced it discourages the competitors right, coz they are the one to first introduce that to the market?

    aslo the 3rd one…its useful to launch coz since its competitive this product will not be effected coz they have no other similar products righ?

    plz correct me if im wrong, the answer was 1st one only!

    May 9, 2024 at 11:49 am #705145
    LMR1006
    Keymaster
    • Topics: 4
    • Replies: 1496
    • ☆☆☆☆☆

    Market skimming pricing is appropriate when the price sensitivity of demand is unknown.
    It allows the company to set a high initial price and gradually lower it over time as more price-sensitive customers enter the market.

    Market skimming pricing is “not likely” to discourage competitors from entering the market.
    Truthfully it may attract competition if other companies are able to offer similar products at lower prices.

    I think it’s true…….Market skimming pricing can be useful when launching a product into a competitive market. Since the product is unique and there are no similar products available, it can command a higher price initially and attract customers who are willing to pay a premium for the latest innovation.

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