Disadvantage of skimming pricing strategy

Disadvantage of skimming pricing strategy

1.    Brand image is at stake

The charging very high prices will bring a bad image of the brand for charging unnecessary high price for the product.

2.    Future product launch problems

The charging very high prices and then lowering down with the passage of time will have negative impact on future launch of product. The customer will not willing to pay high price for next product with a view that prices will come down sharply after sometime.

3.    Not suitable for low price product

This strategy will not work for the lower price product where there are many options available to the customer and lower prices offered to public will not attract the customer as the prices difference is not going to be material for the customer.

4.    Not suitable in competitive market

This strategy will not work in high competitive market because in the high competitive market the competitor is going to react quickly .The competitor will get the maximum share by reducing the prices. This strategy will only work in the high competitive market if your product offers some additional features as well.

Characteristics of Market Skimming Pricing

Characteristics of Market skimming Pricing

1.    High Introduction Price

In market skimming strategy organization charge high price at the time of introduction, because some customer are ready to buy the product at high price.

2.    Price Gradually Decreases

In market skimming strategy prices are gradually decreases to capture market share.

3.    High Advertising Cost

In market skimming strategy, firm is required to spend a lot on the advertising to attract maximum high value customer (customer ready to pay high price).