ExpertEasy2 marksMultiple Choice
ACCA · Question 12 · Decision-making techniques
Section A
SkyHigh Aerospace has developed a revolutionary new lightweight drone. They have a patent on the technology and there are currently no direct competitors. The company needs to recover high research and development costs quickly before competitors reverse-engineer the product.
Which pricing strategy is most appropriate for SkyHigh Aerospace?
Section A
SkyHigh Aerospace has developed a revolutionary new lightweight drone. They have a patent on the technology and there are currently no direct competitors. The company needs to recover high research and development costs quickly before competitors reverse-engineer the product.
Which pricing strategy is most appropriate for SkyHigh Aerospace?
Answer options:
A.
Penetration pricing
B.
Market skimming
C.
Marginal cost pricing
D.
Loss leader pricing
How to approach this question
Identify the pricing strategy used for innovative, patented products with high R&D costs and no immediate competition.
Full Answer
B.Market skimming✓ Correct
Market skimming is the strategy of charging high prices initially to 'skim' the maximum profit from the market segment willing to pay a premium for a novel product. It is ideal for products with high R&D costs, short life cycles, or patent protection.
Common mistakes
Confusing skimming with penetration pricing.
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