Penetration Pricing

Penetration pricing is a marketing strategy in which a company sets a lower price for its products or services in order to attract customers and gain market share. This strategy is common in new product introductions or when a company wants to quickly capture a larger portion of the market. By offering a lower price than competitors, a company can encourage customers to switch to their product, and once they have gained a foothold in the market, they can gradually increase their prices. For example, a new smartphone company may offer their product at a lower price than established brands in order to attract customers who are looking for a good deal. A restaurant may offer a discount on their menu items during their grand opening to encourage customers to try their food and become regulars. However, it is important to note that once a company has established itself in the market, it may not be able to sustain the lower prices and may need to adjust their pricing strategy accordingly.