A penetration pricing strategy is particularly appropriate when demand is
A)increasing.
B)highly elastic.
C)highly inelastic.
D)decreasing.
E)inefficient.

Question

Quizplus · Accepted Answer

A penetration pricing strategy involves setting a relatively low price initially to gain market share or attract price-sensitive customers. This strategy is effective when demand is highly elastic, meaning that a small change in price has a large effect on demand. When demand is highly inelastic, customers are willing to pay a high price for the product regardless of its cost, so a penetration pricing strategy would not be as effective in this situation.

A Penetration Pricing Strategy Is Particularly Appropriate When Demand Is