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Market skimming, also known as price skimming, is a pricing strategy where a product or service is initially sold at a higher price and then gradually lowered over time. ![]() The Concept of Market Skimming: Key Definitions and Principlesīefore we dig into the intricacies of market skimming, it’s important to get a firm understanding of what exactly this term means. So, are you ready to dive deeper into the world of market skimming? It’s a fascinating journey that can give you valuable insights into how successful businesses grow and thrive. In the business world, this can be a powerful tool – but like all strategies, it needs to be used wisely and carefully. Think of it like fishing with a net – first, you capture the big, valuable fish near the surface, and then you cast your net deeper to catch the smaller fish. ![]() Once this phase is over, the company then gradually lowers the price to attract a wider customer base – moving from the ‘cream’ of the market to the wider layers underneath. The idea here is to maximize profits from the get-go, recouping the research and development costs quickly. These customers are typically not very price-sensitive and are more interested in the unique features, quality, or status that the product offers. The aim is to ‘skim’ the market’s top layer, targeting customers willing to pay a premium for being the first to own the latest and greatest product. Market skimming, also known as price skimming, is a strategy where businesses initially set high prices for their new products or services. ![]() It’s an intriguing concept that can significantly boost a company’s profits when used correctly. Have you ever wondered how some businesses launch their products at sky-high prices, yet still manage to attract a significant number of customers? The secret lies in a clever pricing strategy known as market skimming. Understanding Market Skimming: An Introduction
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