penetration pricing policy is MOST LIKELY to be effective when

Question

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Penetration pricing is most effective when there are price-sensitive consumers in the market who are willing to try a new product at a lower price. This strategy is used to attract customers, gain market share, and create brand awareness. By setting a lower price, the company can also discourage potential competitors from entering the market. However, if lowering the price has only a minor effect on increasing sales volume and reducing unit costs, penetration pricing may not be effective.  Additionally, if customers perceive a high initial price as a sign of high quality, a penetration pricing strategy could backfire.

Penetration Pricing Policy Is MOST LIKELY to Be Effective When