Concept explainers
To determine: The conditions under which the manufacturer of the digital camera adopts the skimming and penetration pricing approach.
Introduction:
The method that is adopted by the firm to fix the selling price is known as pricing. The pricing generally depends on the average cost and the perceived value of the product.
Explanation of Solution
Skimming pricing approach:
The manufacturer of the digital camera may adopt the skimming price approach if there is already a significant perspective of a new product or if it has a unique characteristics. There are some type of protection from the competitive products like the patent that enhances the effectiveness of the skimming strategy.
Penetration pricing approach:
The penetration pricing approach may be adopted if the new product production unit and the costs for marketing declines as there may be an increase in the volume of production and the prices are sensitive in the market segments. This type of product may take part in the broad segment of the population and be positioned as a “me-to” product.
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Marketing
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