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Skimming Pricing Strategy

This is often used when a new product is introduced into a market with little to no competition. Here a firm uses a higher than normal price in an effort to quickly recover the initial devlopmental and promotional costs of the product.

This strategy promotes the product towards the segment of the market that is not senstive to price. If the firm sets the price too high to generate sufficient volume, it can quickly be corrected and lowered.

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