Marketing Managemant Essay Example | Topics and Well Written Essays - 500 words

Marketing Managemant - Essay Example However, this is not always the case. Sometimes firms charge higher prices when they enter a new market. This strategy is referred to as Price Skimming by the market tacticians. For example, Governments often set prices high in a marketplace where it considered that increase in competition will contribute towards market efficiency. For example, In Saudi Arabia the oil cost to the government is extremely low but they charge a good amount of price in the market to encourage more competitors in the market. This is just one example. Another example of this can be the market public utilities where huge sums of investments are required. The governments in order finance such large investments often keep high initial consumer prices to make sure that more and more companies enter the market and total investment in the country increases as it has many macro-economic advantages. Price skimming is said to be very advantageous for the new firm entering the market and also for the marketing as a whole. For a higher price would mean higher profits for the firm itself and they won't have to resort to lower revenues and lower profits in the context of penetration pricing.