Penetration Pricing

• Used by a company who wants to enter a market in which competitors sells similar products. The price is set lower than competitors to tempt customers sway. One popular, its price is raised to be in line with competitors prices.
• Advantages:

  • Low price attracts more consumers, leads to high sales and market share.
  • High sales lead to a decrease in the cost of production.
• Disadvantages:

  • Might not necessarily achieve high profit.
  • Consumers may think it is low quality.