A penetration pricing policy is MOST LIKELY to be effective when A)lowering the price has only a minor effect on increasing sales volume and reducing unit costs. B)many segments of the market are price sensitive. C)the high initial prices do not attract competitors. D)customers interpret high price as signifying high quality. E)customers are willing to buy immediately at the high initial price.

Question

Quizplus · Accepted Answer

Penetration pricing is most effective when there are many segments of the market that are price sensitive, as this pricing strategy involves setting a low initial price to encourage demand and attract customers away from competitors. This is especially effective when there are many potential customers who are value-conscious and willing to switch brands or products based on price alone.

A Penetration Pricing Policy Is MOST LIKELY to Be Effective