Critical Thinking Penetration pricing is one approachto pricing for a new product launch. It is a helpfultactic to gain initial trials, build market share, discourage competitors, and pursue economies of scale.However, the initial price may set an expectation ofvalue among consumers and essentially position thebrand as a low-quality offering. This may result insome consumer resistance to purchasing the newproduct in the future if prices increase.In light of this trade-off between benefits and potential risks, to what extent do you think penetrationpricing is a suitable approach to helping a new product become successful in the marketplace? Would it bemore appropriate to have some form of sales promotion or other incentive to encourage initial sales insteadof some form of discounting? Do you think that a lowprice, even for an introductory period, would result ina negative perception of the brand?
Customary Pricing
There are various types of pricing strategies followed in the market. They are psychological pricing, odd pricing, free onboard pricing, customary pricing, prestige pricing, dual pricing, ruling pricing, negotiated pricing, mark up pricing, etc. each one can be explained as follows:
Multiple Unit Pricing
“Multiple-unit pricing is a practice where a company offers consumers a lower than unit price if a specified number of units are purchased.”
Critical Thinking Penetration pricing is one approach
to pricing for a new product launch. It is a helpful
tactic to gain initial trials, build market share, discourage competitors, and pursue economies of scale.
However, the initial price may set an expectation of
value among consumers and essentially position the
brand as a low-quality offering. This may result in
some consumer resistance to purchasing the new
product in the future if prices increase.
In light of this trade-off between benefits and potential risks, to what extent do you think penetration
pricing is a suitable approach to helping a new product become successful in the marketplace? Would it be
more appropriate to have some form of sales promotion or other incentive to encourage initial sales instead
of some form of discounting? Do you think that a low
price, even for an introductory period, would result in
a negative perception of the brand?
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