Answers
Luxury brand buyers
Xbox uses this strategy
Innovation increases demand
Production charge plus profit
Rival launches a new product
Young professionals
Advances reduce production costs
New devices raise prices
Attracts new customers
Families with children
Retired customers
Lowers charge for later buyers
Business undercuts rival prices
Innovation changes willingness to pay
Rival holds a sale
Low charge to attract buyers
Price war between brands
Rival reduces its price
Outdated devices lose value
Sky TV uses this
Ensures profit is made
Charge rises over time
Rival improves customer service
Aims to gain customers quickly
New features attract higher prices
Early adopters pay more
Low profits at first
High charge at launch
Ignores willingness to pay
High expenses mean high charge
Charge falls over time
Budget conscious shoppers
£2 to make plus 25%
High income earners
Maximises early profits
Adds mark-up to expenses