Which of the following statements about penetration pricing is most accurate?
A)Penetration pricing is a profit-oriented approach to pricing.
B)Penetration pricing is a cost-oriented pricing method.
C)Penetration pricing encourages competitors to enter a market.
D)Penetration pricing is more effective in a marketplace with price-sensitive consumers.
E)Penetration pricing usually precedes a skimming pricing.

Question

Quizplus · Accepted Answer

Penetration pricing is a pricing strategy where a product is priced at a very low price initially to attract price-sensitive customers and gain market share. This strategy is more effective in a marketplace with price-sensitive consumers as they are likely to switch to lower-priced products. The goal of this strategy is to increase sales volume and market share, rather than immediate profits. This approach can encourage competitors to enter the market to exploit the price-sensitive customer base. Penetration pricing is often followed by a skimming pricing strategy where the price of the product is increased once the market share is captured.

Which of the Following Statements About Penetration Pricing Is Most