Author Question: Explain the difference between skim pricing and prestige pricing and explain why these types of ... (Read 92 times)

acc299 · **on:** Jun 29, 2018

Explain the difference between skim pricing and prestige pricing and explain why these types of strategies are used.

Question 2

What are exchange controls? Why are they used and what are the consequences of using them?

mfedorka · **Reply #1 on:** Jun 29, 2018

Answer to Question 1

Skim pricing is typically a temporary strategy where a company sets a price at a high level for a short time. New, innovative products entering a marketplace often employ this type of strategy because some buyers are willing to pay a high price to have the newest products. By contrast, with prestige pricing a company sets a high price throughout the life of a product. The high price is designed to signify quality.

Answer to Question 2

Exchange controls limit the amount of a currency that can be exported or exchanged with other countries. These controls allow a country to maintain greater control over its exchange rate. International businesses may find that it is hard to send profits back to a home country from a country with exchange controls. Such businesses may need to purchase export products and then resell those products to move profits out of a country.