What are the differences between penetration pricing and skimming?
An example of an AI chatbot conversation about penetration pricing vs skimming strategies.
What are the differences between penetration pricing and skimming?
Penetration pricing involves setting a low price to enter a competitive market, while skimming sets a high price initially to maximize profits from early adopters.
Can you give me examples of each strategy?
Sure! An example of penetration pricing is Netflix offering low subscription rates to attract users. Skimming is seen in tech products like the latest iPhone, which launches at a high price.
What are the advantages of using penetration pricing?
Advantages include quickly gaining market share, attracting price-sensitive customers, and discouraging competitors from entering the market.
Are there any risks associated with skimming pricing?
Yes, risks include alienating price-sensitive customers, potential backlash if prices drop later, and competitors may quickly enter the market.
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