First, it should be mentioned that price skimming works best for fresh products that have some unique properties (new flavor, innovative features, upgraded functionality, etc.). Otherwise, it will not be appealing for buyers.
In order to implement a price skimming strategy, you need to manage the life cycle of your product after its release. Once it hits the shelves
, the demand for your product will probably be the highest. By focusing your positioning on upper market segments, you can redeem the cost of development and make more initial profit.
Right after the release, your product is likely to have minimal direct counterparts on the market. By the time the competition for your product appears, you will have your reputation established thanks to a group of satisfied customers. At this point, you will be ready to switch your positioning to lower market segments.
Hence, price skimming allows a retailer to reach every segment of his target market and earn the maximum revenue that these buyer categories can generate. If used correctly, skimming can become a nice countermeasure against competitors trying to enter the market using penetration pricing.