Forum Posts on Price Skimming and Penetration Pricing

Running head: FORUM POSTS 1
Forum Posts
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FORUM POSTS 2
 For what type of products would price skimming be most appropriate? For what type of
products would penetration pricing be more effective?
Price skimming works best when the product being sold is one of high status, for example a car.
The price is set as high to communicate product value and quality and then reduced overtime.
Penetration pricing is appropriate when the company is entering a new market or introducing a
new product. It helps consumers notice the product due to price hence adopt the product. Price
skimming is one of the strategies used by companies whereby a firm charges the highest initial
price to make the consumers pay. It can be appropriately used when the number of consumers
willing to buy at a high price is high. Also, in aids in market segmenting. This is whereby prices
can be lowered to satisfy the needs of every consumer thus maximizing on the profits. Lastly, it
instills price consciousness among the buyers rather than having them to be prestige conscious.
Price skimming works best when the product being sold is one of high status, for example a car.
The price is set as high to communicate product value and quality and then reduced overtime.
Penetration pricing is a situation whereby a company sets low prices for the product to reach a
wide fraction of people. Its expectation is always that when customers receive such products,
they will easily shift to the new brand because of the low prices. It is appropriate when the
company is entering a new market or introducing a new product. It helps consumers notice the
product due to price hence adopt the product. Majorly, it is used in in discount stores such as
Wal-Mart. Here, first, it will be used as a bait for marketing of the new product so that it can get
market from their competitors. Lastly it can be used when the company is willing to lose money
just to get new customers.
Peers post
Price competition is depending on the low price to cover the market. When the products of
various companies are similar in performance, efficiency, offer, popularity and the
marketing, they can only depend on the low price to cover more market share (Chan,
Narasimhan & Yoon, 2017). As for the non-price competition, it depends on the different
service, advertises and channels to expand the market share, except the price. It is suitable
for the creative products.
As for the price skimming, it is suitable for the new and creative products in the market
when the customers do not have rational identification on the products. Their purchasing
motivation is curiosity. As for the new products in the market which there are already