Which of the following, if true, strengthens the argument for adopting a price skimming strategy?

Question

A) Existing operating systems satisfy most customer requirements.
B) Two competitors are expected to release new versions of their operating systems in the coming weeks.
C) Large organizations are eager to adopt the new version because of improved enterprise functions.
D) The majority of sales are expected to occur through original equipment manufacturers, which are companies that manufacture computers and sell them bundled with the operating system.
E) New sales are expected to be low, with most sales being less-profitable upgrades from the previous version of the operating system.

Answer 1

Answer: C
Explanation: C) Price skimming involves charging a high initial price. This strategy can make sense when the product has high value and there are customers who are willing to pay the high price. If Choice C were true, then those customers would be very interested in the new product, and the fact that they are large organizations makes it highly likely that they could pay the high price. Choice A means that consumers have little incentive to purchase a new product at a higher price. Choice B weakens the argument, as increased competition would make it difficult for Doors to charge a very high price. Choice D could only weaken the argument by making it harder to market precisely to high-end customers. Choice E, if anything, suggests that the market is less eager for the new product.