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Question
The main aim of penetrating pricing is to ______.
Options
Provide funds for expansion
Maximize the market share
Provide a reasonable return on capital
Avoid price wars
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Solution
The main aim of penetrating pricing is to maximize the market share.
Explanation:
Penetration pricing involves setting a low initial price for a new product to attract a large number of customers quickly and gain a significant market share. By doing so, the company aims to establish a strong presence in the market, discourage competitors from entering, and build customer loyalty. Once a substantial market share is achieved, the company may gradually increase prices to improve profitability.
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"Penetrating pricing leads to setting a high initial price". Comment
