I (Meaning and importance of Exports) Unit Structure

7. Prestige Status 
Only the higher class of the society can afford to pay high 
prices and as such it brings prestige status to the users. 
8. Reflection of High Quality 
High prices often reflect high quality of the product many-a-
times, customers psychologically fell that high prices mean high 
quality. 
10.6.3 
DISADVANTAGES 
OF 
SKIMMING 
PRICING 
STRATEGY
1) Slower Turnover 
High prices may prevent quick sales and as such it may 
result into slow turnover. 
2) Growing Competition 
High profit margin may attract new competitors into the 
market resulting into severe competition and price-cutting practices. 
3) Customer Dissatisfaction 

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High prices may create the problem of brand loyalty. Repeat 
orders may not easily flow on account of customer dissatisfaction 
towards high prices. 
4) Uncertainty of High Profit in the Long Run 
Initially, when the product is introduced the profits may be 
safeguarded but soon the prices have be lowered, thereby 
adversely affecting the overall profitability of the firm. Hence the 
strategy may not be feasible in the long run. 
5) Not Useful for Products of Daily Use 
Skimming price strategy may be advantageous only case of 
producers goods and not for consumer goods of daily use. 
10.7
PENETRATION PRICING STRATGY 
 
10.7.1 MEANING 
 
A strategy of charging low prices in the early stages of 
product introduction in the market is called “Penetration Pricing 
Strategy”. 
The objectives in to launch a new product at a lower price to 
capture as large a share of the market as possible within a short 
time . 
This strategy is suitable to those newly introduced products, 
which can generate a large volume of business.