To discourage competitive entry, a company can price its new product low, using penetration pricing. This pricing strategy also helps to:

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Penetration pricing is a pricing strategy where a company introduces a new product at a low price to attract customers and quickly gain market share. By doing so, the company can build unit volume by attracting a large number of customers who are enticed by the low price. This can help discourage competitors from entering the market, as they may find it difficult to compete with the established player's low prices and large customer base. Additionally, building unit volume can help reduce costs through economies of scale. While building customer loyalty may be a potential benefit of penetration pricing, it is not the primary goal. The goal is to quickly gain market share and discourage competitors. Similarly, while increasing profits may be a long-term goal, it is not the primary focus of this pricing strategy in the short term.

To Discourage Competitive Entry, a Company Can Price Its New