Question

Differentiate between price skimming and price penetration technique of pricing.

Answer 1

	Price Skimming	Price Penetrating
1.	Goods are sold at higher prices so that fewer sales are needed to break even.	Price is initially set at a price lower than the eventual market price to attract new customers.
2.	It is usually employed to reimburse the cost of investment of the original cost	It has a marketing objective of increasing market share rather than to earn profit.
3.	It is used to target ‘early adopters’ of a product or service.	It works on the expectation that customers will switch to the new brand because of the low price