Penetration pricing works best for goods or services:
A)that offer a unique advantage over competitors' brands.
B)that are characterized by highly elastic demand.
C)that face little or no competition in the market place.
D)that involve high production and operational costs.

Question

Quizplus · Accepted Answer

Penetration pricing is a pricing strategy where products are initially sold at a low price to penetrate the market quickly and gain a high market share. This strategy is suitable for goods or services with highly elastic demand, meaning that consumers are highly responsive to changes in prices. This is because a lower price can persuade consumers to switch from a competitor's product to the new product. Therefore, option B is the best choice as it aligns with the characteristics required for penetration pricing to be successful. Options A, C, and D may not require penetration pricing as much as B, as they may have other advantages that distinguish them from competitors, face little or no competition, or have high costs that require a different pricing strategy.

Penetration Pricing Works Best for Goods or Services