A penetration pricing policy is MOST LIKELY to be effective when
A)lowering the price has only a minor effect on increasing the sales volume and reducing the unit cost.
B)many segments of the market are price sensitive.
C)the high initial price will not attract competitors.
D)customers interpret the high price as signifying high quality.
E)enough prospective customers are willing to buy immediately at the high initial price to make these sales profitable.

Question

Quizplus · Accepted Answer

Penetration pricing is a strategy of setting a low price for a new product or service in order to attract a large number of consumers and gain market share. This strategy is most effective when there are many segments of the market that are price-sensitive, meaning that customers are highly responsive to changes in price. By setting a low initial price, businesses can attract these price-sensitive customers and gain traction in the market. This approach can also help discourage competitors from entering the market if they perceive that the low price is unsustainable or unprofitable.

A Penetration Pricing Policy Is MOST LIKELY to Be Effective