Discussion Board: Price Skimming Strategy
Discussion Board Price Skimmingprice Skimming Strategy Is A New Prod
Discussion Board – Price Skimming Price skimming strategy is a new product strategy that results in a high initial product price being reduced over time as demand at the higher price is satisfied. Research a product or service that may have entered the market with a high initial price and now the demand at the higher price is satisfied. Discuss why you believe consumer demand has changed for this product or service which resulted in satisfaction of the market. Note: 250 words minimum with intext citations and references must.
Paper For Above instruction
The price skimming strategy is a marketing approach where a company introduces a new product at a high price point, capitalizing on early adopters willing to pay a premium, before gradually lowering the price to attract more price-sensitive customers (Kotler & Keller, 2016). This strategy is often used in technology sectors, where innovation rapidly diminishes in value, necessitating a high initial price to recover research and development costs (Crawford, 2021). An illustrative example is the launch of the Apple iPhone X. When it was first released in 2017, the device was priced at approximately $999, targeting early adopters and tech enthusiasts willing to pay a premium for cutting-edge features (Apple, 2017). Over time, as the market matured and the initial hype subsided, Apple reduced the price, making the device accessible to a broader consumer base.
Consumer demand for the iPhone X initially remained high at the premium price due to factors such as perceived technological superiority, brand loyalty, and the desire to be among early users (Statista, 2018). Over time, several factors contributed to a shift in demand. First, the introduction of newer models with enhanced features made the original iPhone X less desirable, leading to a decline in demand at the higher price point (Hu, 2018). Second, the reduction in price made the product more affordable to a larger segment of consumers, including those who were previously deterred by the initial high cost, thus increasing overall demand (Kumar & Rajan, 2019).
Additionally, technological advancements and increased competition from other brands offered consumers alternative options, reducing the unique value proposition of the iPhone X (Cheng, 2020). The decline in early demand at high prices was offset by the broader market's acceptance at lower prices, which satisfied the initial demand and extended the product's lifecycle. In conclusion, consumer demand shifted as technological aging, competitive pressures, and price reductions made the product accessible and appealing to a larger audience, fulfilling the market needs initially established at the high price.
References
Apple. (2017). iPhone X. Apple Inc. https://www.apple.com/iphone-x/
Cheng, L. (2020). Competitive dynamics in smartphone markets. Journal of Marketing, 84(2), 24-39.
Crawford, C. (2021). Technology product pricing strategies. Harvard Business Review. https://hbr.org/2021/05/strategies-in-tech-product-pricing
Hu, M. (2018). Consumer perception and demand for smartphone innovation. Journal of Consumer Behavior, 17(3), 231-245.
Kotler, P., & Keller, K. L. (2016). Marketing Management (15th ed.). Pearson.
Kumar, S., & Rajan, R. (2019). Market strategies and consumer behavior in smartphone industry. International Journal of Business and Management, 14(2), 47-58.
Statista. (2018). Apple iPhone sales figures. https://www.statista.com/statistics/266962/global-apple-iphone-sales-since-2007