If the company is entering a market whose products are matured, like fans, it is probably not the right strategy for the company to adopt. The product life cycle is a very important point that the company must keep in mind when using the market penetration pricing strategy. All three of these factors are explained in great deal below: The product life cycle The three most critical factors every company thinking of adopting market penetration pricing should keep in mind are the product cycle of the targeted market the consumer that the company is targeting and finally the distribution size or scale of the product. So, to manage this risk companies must use extensive planning and concurrent strategies with Market penetration pricing.Ī great example of a market penetration strategy is the same strategy used by Kroger and Costco to attract new customers for their retail operations.įigure 1: The three critical factors impacting the market penetration pricing Advertisements
The company is then able to build on gaining the market share and can then offer high-quality products at a higher price point which can make up for the loss associated with using the market penetration pricing.Ī huge risk associated with market penetration pricing is that if a company applies this strategy and then raises prices then the customers will be turned off its product as the main reason that they were purchasing the product was due to the low cost associated with the product. Number two is that companies are able to attract customers that may at first be hesitant to try the new product. Number one is that brands are able to market their products at lower costs as the sale of products in itself is a marketing strategy. There are dual advantages associated with market penetration pricing. It is a very common strategy that is adopted by new incumbents in a market. The seller may sell the product at a loss to gain market share from established players in the market. Market penetration pricing is defined as offering a product or service at a lower cost to achieve a greater market share in a particular market segment.
0 kommentar(er)
