Which pricing policy is probably "best" for a profit-oriented, low-cost producer who is introducing a new product into a market with elastic demand and is expecting strong competition very soon after product introduction?
A) Skimming pricing
B) Introductory price dealing
C) Meeting competition pricing
D) Penetration pricing
E) Status quo pricing

Question

Quizplus · Accepted Answer

Penetration pricing is the best choice for a profit-oriented, low-cost producer who is introducing a new product into a market with elastic demand and is expecting strong competition soon after product introduction. Penetration pricing involves setting a low price to penetrate the market and gain market share quickly while discouraging potential competitors from entering the market. This pricing strategy is effective in a market with elastic demand because it encourages customers to switch from competitors to try the new product at a lower price. Additionally, this strategy enables the firm to establish its brand and customer loyalty.

Which Pricing Policy Is Probably "Best" for a Profit-Oriented, Low-Cost