Penetration pricing

Examples of Penetration pricing in the following topics:

• Demand-Based Pricing

  • These include: price skimming, price discrimination, psychological pricing, bundle pricing, penetration pricing, and value-based pricing.
  • Penetration pricing is the pricing technique of setting a relatively low initial entry price, often lower than the eventual market price, to attract new customers.
  • Penetration pricing is most commonly associated with a marketing objective of increasing market share or sales volume, rather than to make profit in the short term.
  • The main disadvantage with penetration pricing is that it establishes long term price expectations for the product as well as image preconceptions for the brand and company.
  • By definition, long term prices based on value-based pricing are always higher or equal to the prices derived from cost-based pricing.

• New Product Pricing

  • Penetration pricing is the pricing technique of setting a relatively low initial entry price, often lower than the eventual market price, to attract new customers.
  • Penetration pricing is most commonly associated with a marketing objective of increasing market share or sales volume, rather than to make profit in the short term.
  • The advantages of penetration pricing to the firm are as follows:
  • This can achieve high market penetration rates quickly.
  • To gain further market share, a seller must use other pricing tactics such as economy or penetration.

• New Product

  • Penetration and skimming are two strategies employed in pricing new products.
  • What price level should be set in such cases?
  • Two general strategies are most common: penetration and skimming.
  • Penetration pricing in the introductory stage of a new product's life cycle involves accepting a lower profit margin and pricing relatively low.
  • Compare penetration and skimming as two strategies for setting a price level

• Demand-Based Pricing

  • When a company sets an initially low entry price (lower than the eventual market equilibrium price) to attract customers, they are engaging in penetration pricing.
  • Penetration pricing is used when the marketing objective is to increase market share/sales volume.
  • These include: price skimming, price discrimination and yield management, price points, psychological pricing, bundle pricing, penetration pricing, price lining, value-based pricing, geo and premium pricing.
  • Penetration pricing is the pricing technique of setting a relatively low initial entry price, often lower than the eventual market price, to attract new customers.
  • Penetration pricing is most commonly associated with a marketing objective of increasing market share or sales volume, rather than to make profit in the short term.

• The Marketing Mix

  • Price: Prices for such products may be a little higher than conventional alternatives.
  • The price is the amount a customer pays for the product.
  • There are various strategies that can be applied when pricing a product like skimming and penetration pricing.
  • Skimming means to price the product highly to increase profits.
  • Penetration pricing can be applied when you want to enter a market and price your product lower than the perceived market price so that more people will buy it and this will increase your market share.

• Product, Placement, Promotion, and Price

  • The price is the amount a customer pays for the product.
  • Adjusting the price has a profound impact on the marketing strategy, and depending on the price elasticity of the product, often it will affect the demand and sales as well.
  • From the marketer's point of view, an efficient price is a price that is very close to the maximum that customers are prepared to pay.
  • A good pricing strategy would be the one which could balance between the price floor and the price ceiling and take into account the customer's perceived value.
  • Common pricing strategies include cost-plus pricing, skimming, penetration pricing, value-based pricing, and many more.

• Market Share

  • Prices must be set to attract the appropriate market segment in significant numbers.
  • Competitors often try to gain market share by reducing their prices.
  • The price reduction is intended to increase demand from customers who are judged to be sensitive to changes in price.
  • Price reduction is often seen in newer brands that have to compete with already existing brands.
  • New brands not only require lower prices to penetrate the target market, but they typically require more investment as well.

• Impact of the Product Life Cycle on Marketing Strategy

  • Pricing may be low penetration to build market share rapidly or high skim pricing to recover development costs.
  • Pricing is maintained as the firm enjoys increasing demand with little competition.
  • There is intense price cutting, and many more products are withdrawn from the market.

• Marketing by Individuals and Firms

  • Offensive Strategy: This strategy aims to adopt a policy of "destroyer pricing" to preempt the entry of new firms or drive away existing competitors.
  • Also known as predatory pricing, this strategy is useful when competitors or potential competitors cannot sustain equal or lower prices without losing money.
  • Market penetration occurs when a company penetrates a market in which current or similar products already exist.
  • The market penetration strategy is the least risky since it leverages many of the firm's existing resources and capabilities.
  • A prominent example of market penetration was the emergence of Facebook in the social networking market.

• Schistosomiasis

  • Upon contact with contaminated water, the parasitic larvae can penetrate the skin and mature within the organ tissues.
  • These infect freshwater snails by penetrating their skin.
  • The site of penetration will promote the transformation of the miracidium into a primary sporocyst.
  • Penetration of the human skin occurs after the cercariae have attached to and explored the skin.
  • As the cercaria penetrates the skin, it transforms into a migrating schistosomulum stage.