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Market penetration pricing strategy

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From: boystud
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Added: 10.10.2019
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A market penetration pricing strategy means setting the price of a product or service as low as possible to facilitate rapid sales. It is likeliest to succeed in large, growing markets and is most often used in new product introductions. A penetration price is generally chosen when the marketer's goal is to achieve high market share. Penetration pricing is a type of marketing strategy where businesses try to attract customers to try a new product or service.
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Penetration pricing

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Penetration Pricing

By April Maguire. When pricing their wares, most businesses have an inclination to charge the maximum amount possible. Market penetration pricing refers to a strategy in which the price of a product is set low following its introduction in the market. Once the product has found a market segment, the business raises prices to a more reasonable and expected level. Penetration pricing works on the belief that a product has enough buyers to make up for the lower price point. It can also be used as an aggressive tactic against competitors, which will have to lower their prices in response or risk being forced out of the industry. Market penetration pricing offers various benefits over other strategies.
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Penetration Pricing

Penetration pricing is a marketing strategy used by businesses to attract customers to a new product or service by offering a lower price during its initial offering. Market penetration pricing relies on the strategy of using low prices initially to make a wide number of customers aware of a new product. Penetration pricing examples include an online news website offering one month free for a subscription-based service or a bank offering a free checking account for six months. Penetration pricing, similar to loss leader pricing , can be a successful marketing strategy when applied correctly.
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Penetration pricing is a pricing strategy where the price of a product is initially set low to rapidly reach a wide fraction of the market and initiate word of mouth. Penetration pricing is most commonly associated with marketing objectives of enlarging market share and exploiting economies of scale or experience. These are advantages of penetration pricing to the firm: [3]. The main disadvantage with penetration pricing is that it establishes long-term price expectations for the product , and image preconceptions for the brand and company.
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