Penetration pricing may be wise if the firm expects strong competition very soon after introduction.

Question

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Penetration pricing involves offering low prices for a new product to quickly gain market share. This strategy may be effective if the firm expects strong competition soon after introduction as it helps to establish the product and brand before competitors can enter the market. Once the brand is established, the firm may gradually increase prices.

Penetration Pricing May Be Wise If the Firm Expects Strong