Penetration pricing discourages competitors from entering the market.

Question

Quizplus · Accepted Answer

Penetration pricing involves setting a low price initially to attract customers and gain market share. This low price may discourage competitors from entering the market as they cannot compete with such low prices without sacrificing their profits. This can help the business establish itself in the market and increase its customer base, leading to greater profits in the long run.

Penetration Pricing Discourages Competitors from Entering the Market