After the first round of price skimming saturates the high-price market, what happens next?

After the first round of price skimming saturates the high-price market, what happens next?

• A. Increase price to maximize profits
• B. The company lowers its price somewhat to attract customers from the next segment of the market
• C. Stops selling the product
• D. Adds features and raises the price

Answer: (B)

Price skimming relies on capturing value from different customer layers by starting with a high price to target early adopters and maximize margins. Once that high-price segment is saturated, the next strategic move is to lower the price somewhat to attract the next group of customers with a lower willingness to pay. This step expands total sales and extends the product's life cycle without abandoning the premium image, since the price is still above-cost and selective. Raising the price would keep you in the premium tier or discourage the next segment; stopping sales ends revenue; adding features and raising price would only appeal to the already premium segment rather than the broader, more price-sensitive audience.

Price skimming relies on capturing value from different customer layers by starting with a high price to target early adopters and maximize margins. Once that high-price segment is saturated, the next strategic move is to lower the price somewhat to attract the next group of customers with a lower willingness to pay. This step expands total sales and extends the product's life cycle without abandoning the premium image, since the price is still above-cost and selective. Raising the price would keep you in the premium tier or discourage the next segment; stopping sales ends revenue; adding features and raising price would only appeal to the already premium segment rather than the broader, more price-sensitive audience.