Hence, when the business eventually decides to return to the typical costs of the products, the customers could be dissatisfied.

Customers may expect low prices permanently.

The penetration pricing strategy requires a high sales quantity, enabling a firm to realize economies of scale and keep a check on its marginal costs.ĭisadvantages of Penetration Pricing Strategy.

Then, implement them into your product or service.Ĭhisel’s Feedback portal tool lets your target audience share their ideas and opinions in an organized way. One of the most effective ways to boost customer loyalty is by gathering customer feedback and ideas. It helps create a positive atmosphere around the product and even increases customer loyalty. New businesses can build goodwill with many consumers by starting at lower, inexpensive prices.

Customers can find a bargain on a product they had been paying for heavily earlier.

In that case, they may even stick to it after the prices revert to their normal levels, which is the whole point of this strategy. Suppose the product matches the customers’ expectations. Naturally, customers are attracted to a product/service offered at a lower cost than its competitors.

Penetration pricing strategy provides market dominance for a product at its initial stages.

Advantages of Penetration Pricing Strategy With the help of product management tools like Chisel, you can create and manage product roadmaps. If not, this oversight may come back to haunt them later. The companies must also ensure they have a clear roadmap for compensating for these low prices in the long term while employing this plan.

This way, when a large group of customers has tried their product, they may hike their prices and still keep most of those customers. Here, you offer the product at a lower price which helps the product to “penetrate” the market and look appealing to the customers.Ĭompanies use the penetration pricing strategy to garner a more significant chunk of the market audience and cut their competitors’ market share during the initial stages of the launch itself.

Penetration pricing is a marketing strategy businesses employ to attract customers while launching new products or services in the market. The product’s lower price is offered, which helps it “penetrate” the market and appeal to the customers.” “Penetration pricing is a marketing strategy businesses employ to attract customers while launching new products or services in the market.

A penetration price strategy