Commercial Applications
Distinguish between skimming pricing and penetrating pricing.
Marketing Mix
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Answer
| Basis | Skimming Pricing | Penetrating Pricing |
|---|---|---|
| Initial Price | A very high price is set initially. | A low price is set initially. |
| Aim | To skim the cream of demand and recover investment quickly. | To make the brand quickly popular and maximise market share. |
| Target Customers | Aims to sell to the 'classes' (affluent consumers). | Aims to sell to the 'masses' (price-sensitive customers). |
| Demand Type | Suitable when demand is inelastic. | Suitable when demand is highly elastic. |
| Competition | Used when imitation has not taken effect (low competition). | Used when there is strong potential competition. |
| Example | High-end smartphones, luxury cars. | FMCG products like Nirma detergent. |
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