Penetration pricing policy disadvantages

Categories Accounting Banking Company Profiles Economics Finance Abbreviations and Management Finance Questions and Answers Finance Words and Examples Financial Markets Financial Products and Marketing Multiple Choice Questions and Offbeat. The intent of penetration pricing can follow any of these paths: In fact, companies who maintain penetration rates past the introductory period almost inevitably face a loss of profits. The Penetration Pricing Calculation ABC International wants to enter the market for blue one-armed widgets. Both adoption and diffusion rates are high when penetration policy is adopted. Logo Return to Top. Company Customer Reviews About Competera Customer Success Working With Us Careers Partners Program Contacts.

None of these methods are foolproof. One of the biggest benefits is that it can help a company increase its overall sales volume. Start here Articles Guides Tools Videos. Click for More Uploads. Even if market penetration pricing does work as intended, businesses should be aware that the strategy will only be effective for a limited period of time. In many countries predatory pricing is considered illegal.

The idea is to expand market share and gradually increase prices over time. Generally, penetration pricing is most effective when both product demand and competition are high. Businesses that are considering this technique, however, should be sure they have a solid promotional strategy in place. Market share growth or creating market for a brand new product is the major goal of penetration pricing. The goal is to keep profit potential high without sacrificing your new, larger market share.