When a new product or service is launched, companies that use a ______ strategy will attempt to attract customers quickly by offering a very low price at first

When a new product or service is launched, companies that use a ______ strategy will attempt to attract customers quickly by offering a very low price at first

• A. Value-based pricing
• B. Dynamic pricing
• C. Penetration pricing
• D. Premium pricing

Answer: (C)

Penetration pricing focuses on gaining rapid market share by starting with a very low price. This makes the product attractive to price-sensitive customers, encouraging trial and quickly building volume, which can also deter competitors from entering the market early. As adoption grows, the price can be raised gradually or the business can monetize through other means while maintaining a large installed base. Other strategies don’t fit this scenario: value-based pricing sets price by perceived value rather than a deliberately low entry price, dynamic pricing adjusts with demand, and premium pricing uses a high price to signal luxury or quality.

Penetration pricing focuses on gaining rapid market share by starting with a very low price. This makes the product attractive to price-sensitive customers, encouraging trial and quickly building volume, which can also deter competitors from entering the market early. As adoption grows, the price can be raised gradually or the business can monetize through other means while maintaining a large installed base. Other strategies don’t fit this scenario: value-based pricing sets price by perceived value rather than a deliberately low entry price, dynamic pricing adjusts with demand, and premium pricing uses a high price to signal luxury or quality.