Which of the following statements about penetration pricing is true?
A)Penetration pricing is a cost-based pricing method.
B)Penetration pricing encourages competitors to enter a market.
C)A penetration pricing strategy is more effective in a marketplace with price-sensitive consumers.
D)Penetration pricing is a profit-oriented approach to pricing.

Question

Quizplus · Accepted Answer

Penetration pricing is a strategy of setting a low price for a new product or service initially to attract customers and gain market share. This approach is more effective in a marketplace with price-sensitive consumers who are more likely to be attracted to cheaper alternatives. This pricing method is not necessarily cost-based or profit-oriented, and it may discourage competitors from entering a market by making it difficult for them to compete on price.

Which of the Following Statements About Penetration Pricing Is True