A pricing strategy where a low price is set to quickly gain market share.

A pricing strategy where a low price is set to quickly gain market share.

• A. Discount
• B. Penetration Price
• C. Markup
• D. Product Life Cycle

Answer: (B)

Penetration pricing is a strategy that sets a low price to quickly gain market share. By offering a low price, a company can attract a large number of customers, boost sales volume, and often achieve economies of scale that help sustain the low margins. This approach is especially useful when entering a new market or introducing a product in a price‑sensitive segment, with the goal of establishing a foothold before possibly raising prices later or competing more effectively on value. A discount is typically a temporary reduction used for promotions rather than a deliberate long-term market-entry tactic. Markup is simply the amount added to cost to determine selling price, not a broader strategy to capture market share. The product life cycle describes the stages a product goes through over time, not a pricing approach by itself.

Penetration pricing is a strategy that sets a low price to quickly gain market share. By offering a low price, a company can attract a large number of customers, boost sales volume, and often achieve economies of scale that help sustain the low margins. This approach is especially useful when entering a new market or introducing a product in a price‑sensitive segment, with the goal of establishing a foothold before possibly raising prices later or competing more effectively on value.

A discount is typically a temporary reduction used for promotions rather than a deliberate long-term market-entry tactic. Markup is simply the amount added to cost to determine selling price, not a broader strategy to capture market share. The product life cycle describes the stages a product goes through over time, not a pricing approach by itself.