penetration pricing

• What is penetration pricing?

  Setting a price really low on a new product to encourage sales and persuade them to try the product
• What should the lower prices lead to?

  Business gaining more market share
• Give a benefit of penetration pricing?

  Works best with new products being launched to encourage customers to try the product
• Give 2 drawbacks of penetration pricing?

  Consumers may have brought without the low price anyway

  Expensive - reduces sales revenues which eats into profits