In markets where customers are sensitive to price and where internal efficiencies lead to cost advantages allowing for acceptable margins even with aggressive pricing, a ________ strategy can create a powerful barrier to market entry for other firms.
A) penetration pricing
B) target ROI
C) price skimming
D) competitor-based pricing
E) value pricing

Question

Quizplus · Accepted Answer

Penetration pricing is a strategy where a company sets a low price for its product or service to gain market share quickly. This strategy can be effective in markets where customers are sensitive to price because it can attract price-sensitive customers away from competitors. Additionally, if the company has internal efficiencies that lead to lower costs, it can still achieve acceptable margins even with aggressive pricing. This can create a powerful barrier to market entry for other firms because it becomes difficult for new entrants to compete on price and still make a profit.

In Markets Where Customers Are Sensitive to Price and Where