A firm tends to use penetration pricing when it:
A)perceives the demand for a new product to be price inelastic.
B)wants to charge a relatively high price on a new product.
C)expects competition to move in rapidly.
D)has a temporary monopoly in the market.

Question

Quizplus · Accepted Answer

Penetration pricing is a strategy used to quickly gain market share by setting an initially low price to attract customers. This approach is particularly effective when a firm expects competition to enter the market rapidly, as it helps establish a strong customer base and brand recognition before competitors can gain a foothold.

A Firm Tends to Use Penetration Pricing When It