Penetration Pricing

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Definition
Penetration pricing is a kind of pricing
strategy used by companies to attract
consumers to new products or services.

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Advantages
• It creates high stock turnover
• The company can appeal to a broader
market
• Competitors may be caught off guard

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Disadvantages
• It can create an expectation of
permanently low prices
• Demand becomes highly price elastic
• The product will see tough competition
after its introduction

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