Skimming

In: Business and Management

Submitted By maxrosli1
Words 2420
Pages 10
Contents

1. Introduction 2
1.1 Introduction to pricing strategies 2
1.2 Introduction to Apple Incorporation 3 2. Skimming Price Strategy 3
2.1 What is Skimming Price Strategy? 3
2.2 When to use Skimming Price Strategy? 4
2.3 Benefits of Skimming Price Strategy? 5 3. Apple’s iPhone Strategy 6
3.1 Market Segment 7
3.2 Product Life Cycle and Elasticity of Demand 7
3.3 Brand Loyalty 9
3.4 Sales and revenues 9 4. Conclusion 11 5. References 11

1. Introduction 2.1 Introduction to pricing strategies

Pricing strategy is the pursuit of identifying the optimum price for a product. This strategy is combined with the other marketing principles known as the four P's (product, place, price, and promotion) to position its brand in the market. Pricing strategy is perhaps the most critical components of the marketing mix as it is the only P’s which focused on generating revenue and ultimately profit for the company. The remaining 3p’s are the variable cost for the organization because it costs to design and produce a product; it costs to distribute a product and costs to promote it.
Companies may use a variety of pricing strategies, depending on their own unique marketing goals and objectives. Some of the pricing strategies are Penetration Pricing Strategy and Skimming Pricing Strategy. A Penetration Pricing Strategy is designed to capture market share by entering the market with a low price relative to the competition to attract buyers. On the other hand, Skimming Pricing Strategy is aimed to gain high profit margin at initial stage by charging a relatively high price during the launch of a new, innovative product and then lowering the price over time to access different points on the demand curve.
The pricing structure also changes overtime as product move through their lifecycle. The company adjusts its price to reflect changes in…...

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