What pricing strategy involves charging the highest possible price during the introduction stage of a product's life cycle?

The strategy that involves charging the highest possible price during the introduction stage of a product's life cycle is known as price skimming. This approach is often used when a company launches a new and innovative product that has little or no competition. By setting a high price initially, the business aims to maximize profits from early adopters who are willing to pay more for the perceived uniqueness and value of the product.

Price skimming allows the company to recoup its research and development costs more quickly and establishes a perception of exclusivity or premium quality. Over time, as competition increases or as the market becomes more saturated, the company may then lower the price to attract a broader customer base. This strategy is particularly effective for technology and luxury products, where consumers are often willing to pay a premium at launch.

In contrast, other strategies, such as price penetration, focus on setting a low initial price to gain market share quickly. Competitive pricing is oriented around setting prices based on competitors' pricing, while cost-plus pricing involves determining the price by adding a markup to the cost of producing the product. Each of these strategies serves different market contexts and business goals.