What is the short-sighted thinking behind the penetration-pricing strategy?
A) Pricing below competitors will lead to higher market share
B) Gross margins should be very high for a new product.
C) Loyal customers demand the lowest price.
D) The simplest method of selective prices saves time.
E) Prices should match the value of products.

Question

Quizplus · Accepted Answer

Penetration pricing involves setting a lower price for a new product to attract customers and gain market share quickly. The short-sighted aspect of this strategy is the assumption that a lower price will automatically lead to a higher market share, without considering the long-term implications on profitability and brand perception.

What Is the Short-Sighted Thinking Behind the Penetration-Pricing Strategy