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What is the difference between skimming pricing strategy, penetration pricing strategy,...

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barbiedot | Student, Undergraduate | (Level 1) Valedictorian

Posted June 29, 2012 at 6:36 PM via web

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What is the difference between skimming pricing strategy, penetration pricing strategy, and competitive pricing strategy?

 

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pohnpei397 | College Teacher | (Level 3) Distinguished Educator

Posted June 29, 2012 at 6:46 PM (Answer #1)

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All of these strategies are quite different from one another.  In the penetration strategy, a firm is new to the market and sets its prices low so as to get as much market share as possible.  In the skimming strategy, the firm uses different pricing strategies at different times, perhaps starting with a high price to profit from wealthier customers or early adopters and then lowering the price later to attract a wider market.  Finally, the competitive strategy consists of reacting to one's competitors.  In this strategy, the firm reacts to price changes by competitors instead of initiating price changes on its own.

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