The low initial price can create an expectation of permanently low prices amongst customers who switch. Penetration pricing strategies do have some drawbacks, however: Sales volumes should be high, so distribution may be easier to obtain Think of it as a special discount to get people to try something new and spread the word. The low price can act as a barrier to entry to other potential competitors considering a similar strategy Penetration pricing is a strategy where a company sets a low initial price for a new product to attract customers and gain market share quickly. Penetration pricing stimulates the market growth and capture market share by deliberately offering products at low prices. Dynamic Pricing Brands engage in vicious price wars with the aim of persuading customers to purchase their services and products for the best price. It forces the business to focus on minimising unit costs right from the start (productivity and efficiency are important) Penetration pricing is when a product is priced lower than the competition to drive sales during the initial release period. Encouraging word-of-mouth recommendation for the product because of the attractive pricing (making promotion more effective) Catching the competition off-guard / by surprise Penetration pricing is often used to support the launch of a new product, and works best when a product enters a market with relatively little product differentiation and where demand is price elastic – so a lower price than rival products is a competitive weapon.Īmongst the advantages claimed for penetration pricing include: However, there are some significant benefits to long-term profitability of having a higher market share, so the pricing strategy can often be justified. In the short term, penetration pricing is likely to result in lower profits than would be the case if price were set higher. Penetration pricing is most commonly associated with a marketing objective of increasing market share or sales volume. 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. The strategy aims to encourage customers to switch to the new product because of the lower price.
Penetration pricing is the pricing technique of setting a relatively low initial entry price, usually lower than the intended established price, to attract new customers. Penetration pricing is a vigorous pricing strategy in which a business enters the marketplace offering their product or service at an extremely low price. It consists of offering the respective product at lower initial prices than required to make a profit, with the purpose of determining as many people as possible to try it. The aim of penetration pricing is usually to increase market share of a product, providing the opportunity to increase price once this objective has been achieved. A penetration pricing strategy is a marketing strategy that businesses use when introducing a new product or when entering a new market. You often see the tagline "special introductory offer" – the classic sign of penetration pricing.
0 kommentar(er)
