Market-Penetration Pricing



There are a number of pricing strategies, and each depends upon the company's initial pricing objectives. 

Pricing objectives can range from a company seeking survival, needing to maximize profits to maximizing market share.

Here we'll look at Market-Penetration Strategy, which is pricing strategy aimed for when a company seeks to maximize its market share by setting the lowest price, assuming the target market is price sensitive.

Conditions for employing market-penetration strategy:

  • The market is highly price sensitive and a low price stimulates growth
  • Production and distribution costs fall with accumulated production experience
  • A low price discourages actual and potential competition

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