Frito-Lay introduced its Stax brand of potato chips to compete directly against Pringles. The intent was to gain market share quickly. During the first few months they were on the market, Stax retailed for 69 cents. What type of pricing strategy was Frito-Lay likely using?
A)Price skimming
B)Captive pricing
C)Periodic discounting
D)Penetration pricing
E)Reference pricing

Question

Quizplus · Accepted Answer

Frito-Lay is likely using a penetration pricing strategy, where they offer their product at a lower price than their competitors to gain market share quickly. The fact that Stax was introduced at a lower price than Pringles indicates this strategy.

Frito-Lay Introduced Its Stax Brand of Potato Chips to Compete