Which of the following statements about penetration pricing is true?
A)Penetration pricing is a profit-oriented approach to pricing.
B)Penetration pricing is a cost-based pricing method.
C)Penetration pricing encourages competitors to enter a market.
D)A penetration pricing strategy is more effective in a marketplace with price-sensitive consumers.

Question

Quizplus · Accepted Answer

Penetration pricing is a strategy where the price of a product is set low initially to enter a new market and gain market share quickly. This strategy is more effective in a marketplace with price-sensitive consumers who are more likely to switch to a new product if the price is lower than that of existing competitors. Therefore, statement D is true.

Which of the Following Statements About Penetration Pricing Is True