Which of the following describes a strategy of targeting the highest segment of the market initially?

The strategy that describes targeting the highest segment of the market initially is price skimming. This approach involves setting a high price for a new product to maximize profits from the most willing customers before gradually lowering the price to reach a broader audience over time.

Price skimming is particularly effective when launching innovative or premium products, as it allows a company to recover initial development and marketing costs quickly by tapping into customers who are less price-sensitive and eager to pay more for a new offering. Once these customers are satisfied, the business can reduce prices to attract a wider customer base, effectively capturing segments that are more price-sensitive.

This strategy differentiates itself from other options. Market penetration focuses on initially setting a low price to quickly gain market share rather than targeting premium customers. Cost leadership aims to be the lowest-cost provider in the industry, appealing to a broad audience rather than just the high-end market. Differentiation seeks to offer unique value that justifies a higher price, but it does not necessarily focus on targeting the highest segment at the initial launch phase, as price skimming does.