A penetration strategy tends to be effective in a price-sensitive market.Thus,one of the purposes of penetration pricing is to do which of the following?
A) recoup product development costs quickly
B) discourage competitors from entering the market
C) produce a large margin of profit per unit
D) attract the price-insensitive buyer who demands the latest in technology

Question

Quizplus · Accepted Answer

The purpose of penetration pricing is to attract customers who are price-sensitive and may be interested in switching to a new brand or product because of a lower price point. By setting prices lower than competitors, penetration pricing can discourage new competitors from entering the market because it would be difficult for them to match the low prices and still make a profit. While penetration pricing may help to recoup product development costs over time through increased sales, it is not the primary purpose. Additionally, penetration pricing typically results in lower profit margins per unit, making it unlikely that it would attract price-insensitive buyers who demand the latest in technology.

A Penetration Strategy Tends to Be Effective in a Price-Sensitive