Author Question: What are market skimming and market penetration? What will be an ideal ... (Read 89 times)

tiara099 · **on:** Aug 10, 2018

What are market skimming and market penetration?

What will be an ideal response?

Question 2

Why was the Industrial Revolution important to the development of modern restaurants?

a. Decrease in disposable income and population shift toward farms
b. Increase in disposable income and population shift toward cities
c. Invention of the automatic deep fryer
d. Invention of the milkshake machine
e. Use of steam for cooking

pocatato · **Reply #1 on:** Aug 10, 2018

Answer to Question 1

Market skimmingin the market skimming approach, pricing operators use a relatively high price to attract or skim a small segment of the market. This philosophy works best when there is a small percentage of a large potential market that can and will pay the higher prices; where the competition is unlikely to undercut the prices set for similar product offerings; and where customers perceive that the value given in the form of the restaurant experience is greater than the prices charged. Market penetrationon the other hand, market penetration involves setting prices as low as possible while still contributing to profits. This approach sets out to attract as large a market as possible. Ideally, lower prices will create a loyal following, which will translate into greater sales volume and long-term profitability. This philosophy works best when demand is price elastic; that is, when changes in price result in a greater change in demand, and when lower prices will deter competition from invading the market.

Answer to Question 2

B