There is a need for penetration pricing as it is not to cover the choosy customers who are selective at the time of purchase rather this scheme is designed to cover those customers who prefer low price-based goods and services. You also have to focus on the good quality production of the product offering at a low price, so that it can appeal to the customer and can gain consumer trust. Penetration pricing is not for niche markets as opposed to other marketing appeals rather it is focused to target a large number of customers. The concept of marketing is based to make a fusion of low price along with keeping the good product quality to resist the competitor’s product in the market so that they cannot further reduce their price low than your product to meet their unit cost. Penetration pricing is based on the intention to appeal a big ratio of price-sensitive customers far away from other rivals already existing in the market. It is usually for the products expecting a long life cycle as for the household items like soaps, shampoos and to achieve large market share and lock the market by moving with such strategy.This price penetration is for the market when there is a chance that rivals already existing will also move to low prices in the coming time so have to adopt this pricing strategy for new products.It is a scheme used when in the market there is such an adequate number of products that for your product life you have to manage on low earnings. For the products upon which consumers decide upon the basis of price differentiation that what to adopt and what product to skip.It is for the price elastic demand products the products for which there is a direct relation with the price and consumer value their money by charging low prices by modifying the price for the same product.It is adopted by the marketers for products about which consumers are price conscious and can control the market on basis of price.It is also adopted when there is a large number of alternative brands available for the same product to fulfill the need of the consumers so to attain its required space can use such pricing strategy.The penetration pricing approach is used to attain consumer attraction when market saturation condition is at its fullest.The conditions in which this strategy is mostly adopted are: This is mostly implemented when the company has to undergo basic requirements of life. Along with using a skimming strategy they also adopt a penetration pricing strategy for some of their products like for LIFEBUOY SHAMPOO AND SOAP. So it is applied by latecomers or newcomers to gain their position in the market.Ī big example of the companies adopting a penetration pricing strategy is UNILEVER. Although usually, it is for normal consumable products like shampoo, a soap about which consumers are not brand conscious and can switch by observing fluctuation in price. This price penetration strategy can be adopted by a local surf brand by keeping its price low to already existing brands in the market. Most of the time this appeal is used by the manufacturers who enter the market late, so this strategy is adopted by the latecomers to compete with baby boomers and already existing competitors. This pricing strategy is usually adopted by local product producers and for local brands and is for the new entrants to endorse products by keeping the initial prices at a fairly low rate to attract the consumers. You can keep your price low and compete in the market.Īpplying this tactic you have to make a huge promotion of the qualities of your new product so that it can gain its place among competitors. By using this idea you can diffuse new products in a previously existed market in which there are huge rivals. This strategy is implemented by the marketers for achieving the high ratio of sales for their new product by keeping it economical. Penetration pricing is the market concept adopted for a new product to be launched in a market with low prices so that it may penetrate the market and can gain its position amongst the rivals.
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