When Apple introduced its iPhone, it was priced at $599. This allowed Apple to earn the maximum amount of revenue from the various segments of the market. Two months after the introduction, the price had come down to $399. What kind of a pricing did Apple adopt?
A. loss-leader pricing
B. market-penetration pricing
C. market-skimming pricing
D. target-return pricing
E. value pricing
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Market skimming pricing makes sense under all the following conditions, EXCEPT if ________.
A. a sufficient number of buyers have a high current demand
B. the unit costs of producing a small volume are high enough to cancel the advantage of charging what the traffic will bear
C. the high initial price does not attract more competitors to the market
D. consumers are likely to delay buying the product until its price drops
E. the high price communicates the image of a superior product
Starbucks, Aveda, and BMW have been able to position themselves within their categories by combining quality, luxury, and premium prices with an intensely loyal customer base. These companies are employing a ________ strategy.
A. market-skimming
B. market-penetration
C. survival
D. market share maximization
E. product-quality leadership
The first step in estimating demand is to ________.
A. analyze competitors' cost
B. select a pricing method
C. understand what affects price sensitivity
D. calculate fixed costs
E. decipher the experience curve
Consumers are less price sensitive when ________.
A. price is only a small part of the total cost spent on the product over its lifetime
B. they perceive the higher prices to be unjustified
C. they change their buying habits regularly
D. there are many substitutes and competitors in the market
E. they are buying high-cost items
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