Market penetration pricing strategies
Discount penetration pricing is a strategy designed to keep prices low to shut out potential competition. When used in an existing market, it creates a price war.
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Penetration pricing is a marketing strategy used by firms to attract customers to a new product or service.
What is 'Penetration Pricing'
Market-Penetration Pricing – New Product Pricing
Description:It can often increase both market share and sales volume. The major disadvantage, however, is an increase in sales volume may not lead to a profit if prices must remain low. Also, if the low price is part of an introductory campaign, curiosity may prompt customers to choose the brand initially, but once the price begins to rise or level with a competing brand, they may switch back to the competitor. Penetration Pricing Versus Skimming Skimming is the opposite pricing strategy to penetration pricing. Using skimming, they market products at high prices with relatively high margins. Effectively, producers are skimming the market to maximize profits.