Penetration Pricing!

What is it?

• when the product price is set lower than the initial market price
• This helps attract new customers
• Makes customers switch brand because of low price
• Commonly used to create larger market shares
• Prices raised later once this market share is gained.

Advantages

• Not much competition in the initial phase
• Efficient costs
• Good prices for early customers

Disadvantages

• Customers expect prices to stay low
• Cannot create strong customer relationship
• Profit will not always be cosistant

By Brad and Robbie