In marketing strategy, what promotional pricing tactic sets an artificially high initial price for an innovative product to recover high research costs before lowering it?
Answer and explanation
Correct answer: D. Price skimming
- Step 1: Price skimming charges a premium initial price to target early adopters with high willingness to pay, gradually reducing prices over time as competitors enter. Answer: Price skimming. Why not the others: Penetration pricing enters with very low prices, predatory pricing illegally undercuts rivals, and loss leader pricing discounts selected items below cost to drive store foot traffic.
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