Penetration price policy
Penetration pricing is a marketing strategy implemented to draw customers to a new product or service.
What Is Market Penetration Pricing?
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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 can bring new customers into your store, increasing market share and building customer loyalty. However, when implemented incorrectly.
Description:On the other hand, skimming pricing is used when the demand for the product is inelastic. Penetration pricing introduces customers to a new product at a steep discount, and often at a loss to the merchant. It creates goodwill for the company if customers perceive that they are purchasing a high-quality product at a fair price. Economic principle Penetration pricing relies on one main assumption: