Xunrui Communications is an upstart maker of inexpensive smartphones for the Chinese market. Xunrui purchases the components for the items, which are then sent to small assembly factories in Shenzhen, located in southern China. These smartphones retail for about $65, significantly less than the $250 to $600 for smartphones marketed by Apple or Samsung, the top two marketers of these items. Xunrui Communications most likely is using which pricing strategy in this example?

Question

Quizplus · Accepted Answer

Xunrui Communications is using penetration pricing, which is a strategy of setting a relatively low price when entering a new market in order to attract customers and gain market share. This is evident from the fact that Xunrui is selling its smartphones at a significantly lower price than its competitors in order to break into the Chinese market.

Xunrui Communications Is an Upstart Maker of Inexpensive Smartphones for the Chinese