The price charged for products and services is set artificially low in order to gain market share. Once this is achieved, the price is increased.
The costs of marketing and promoting a product are kept to a minimum. Supermarkets often have economy brands for soups, spaghetti, etc. Budget airlines are famous for keeping their overheads as low as possible and then giving the consumer a relatively lower price to fill an aircraft. During times of recession, economy pricing sees more sales.
Price skimming sees a company charge a higher price because it has a substantial competitive advantage. However, the advantage tends not to be sustainable. The high price attracts new competitors into the market, and the price inevitably falls due to increased supply.
This approach is used where a substantial competitive advantage exists and the marketer is safe in the knowledge that they can charge a relatively higher price. Such high prices are charged for luxuries, such as Chanel and first-class air travel.
Julia Taine, Executive Director of Vent2Me, is a marketing problem solver and mentor. A mover and a shaker, Julia sees a niche in an industry, and takes it, by making it her own. Julia started Vent2Me, because people she knew were struggling with their online presence and their digital strategies. Julia knew she could help these people, and so here she is today.