In the context of product considerations in pricing, a(n) _____ is an approach to pricing in which a seller charges a relatively low price on a new product and is used when demand for the product is, at least in the short run, price elastic.
A) going rate policy
B) markdown policy
C) penetration policy
D) skimming policy

Question

Quizplus · Accepted Answer

Penetration policy involves setting a lower price to enter a market and gain market share quickly. This strategy is used when demand is price elastic, which means that customers are highly sensitive to price changes. By offering a lower price, the seller can attract price-sensitive customers and establish a foothold in the market, which can later be used to increase prices and profitability. This strategy is often used for new products where there is a lot of competition and getting customers to try the product is important.

In the Context of Product Considerations in Pricing, A(n) _____