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Price skimming Ls a pricing strategy in wheh a marketer sets a relatively hth price for a
product or servce at first. then lowers the price mer time. It is a teneoral version of prce
discrimination, yield mamgement. It albws the . to recover . sunk co. quickly before
coneetition stece in and homers tce market price. Price skimming is sometimes reirred to
as riling down the demand curve. The objective of a price skimming strategy is to capture
the
consutrer surplus. If this is dore succe.fully. then theorecealy no customer pay le. for the
product than the maximal they are willing to pay. In practice impasse, for a firm to
capture all of tlis surplus.
Penetration pricing Ls the preing technique of setting a relatively bw envy price, often
loner than de .entual market price. to attract new custotrers. The strategy worlcs on tce
expectation that cnstoners switch to the new brani because of the bwer prce. Penetration
pricing Ls most conucenly associated with a marketing objective of itercesing market share
or sal. volume. ratcer than to make profit in the short tem).
Interestingly the company pre. is produ. so coneetitively that not only ensures
that its
margins ale cenered but also assures rmenue maximization. Let as sce how Nokia
leveraged it