When Apple first introduced the iPhone, it used which pricing strategy?

• A. Economy pricing
• B. Premium pricing
• C. Penetration pricing
• D. Price skimming

Answer: (D)

Pricing at the launch of an innovative product often aims to capture the highest value from those who are eager to buy early. This approach sets a high introductory price to maximize margins from early adopters who are less sensitive to price and driven by novelty or prestige, with the plan to lower the price later to attract a broader audience as the product matures and competition increases. When Apple first introduced the iPhone, they charged a premium price, signaling a high-end, desirable product and targeting tech enthusiasts who were willing to pay for the latest innovation. This move prioritized early profits and brand positioning, and it aligned with the strategy of gradually reducing prices in subsequent generations to broaden the market. Other strategies would focus on starting with low prices to achieve rapid market share or maintaining high prices solely because of quality without a planned price decline, which doesn't fit the launch-stage dynamics Apple used.