Problem 1: Penetration pricing occurs when a company launches a product into a market where the product is priced low while the company intends to secure a share of the market. This scheme requires thorough planning. For successful execution of the pricing scheme, the company or manufacturer must be ready and willing to produce the specific product in large quantities. The company or manufacturer should also launch a major campaign that will mainly advertise the low prices of the new products. The entrepreneur must keep in mind that penetration pricing results in a costly operation and must be promptly prepared for the cost. With low consumer demand, the company may suffer from a built-up supply of products with no market and thus become unwanted. Price skimming is a strategy that focuses primarily on increasing and maximizing profits by charging high prices to early customers of the new product. Prices are reduced over time to attract more thrifty consumers. The reduction is mainly made after a significant amount of sales has been made. When ...