All of the Following Are True About a Skimming Pricing

question 69

Multiple Choice

All of the following are true about a skimming pricing strategy when used during the introduction stage of the product life cycle EXCEPT:

• A)it capitalizes on the price insensitivity of early buyers.
• B)its profit margins may be high.
• C)it encourages "me too" entrants into the market.
• D)it recovers the R&D costs of the new offering.
• E)it helps build unit volume.

---

Definitions:

Money Concept

A financial principle that emphasizes the role of currency in transactions and as a measure of value in the economic system.

Net Present Value Method

A financial analysis technique that discounts all cash flows associated with a project to their present value to help assess the project's profitability.

Capital Investment Analysis

Involves evaluating the potential profitability and risks of investments made in long-term assets to determine their feasibility and impact on a company’s future.

Average Rate of Return

It calculates the return, generated over a period of time, of an investment compared to the initial investment.