Question

What is penetrating pricing?

Answer 1

This strategy involves setting a low price in the initial stage so as to make the brand quickly popular and to maximise the market share. The manufacturer seeks to sell to the masses. Many firms use this strategy while launching fast moving consumer products. The policy results in high sales volume during the initial stages of a product's life cycle. Some retailers use this strategy by operating on the principle of low markup and higher volume. Penetrating pricing is an aggressive pricing strategy and it may be used to restrict the entry of new firms in the industry.