$4.$ Skimming price is known as short period device for pricing. Here, companies tend to charge higher price in initial stages. Initial high helps to $$Skim the Cream$$ of the market as the demand for new product is likely to be less price elastic in the early stages. Penetration price is also referred as stay out price policy since it prevents competition to a great extent. In penetration pricing lowest price for the new product is charged. This helps in prompt sales and keeping the competitors away from the market. It is a long term pricing strategy and should be adopted with great caution.

Required:

Write a paragraph discussing the differences between the $2$ pricing strategies. Which pricing strategy do you b believe is the most effective?