Setting a price that is too low may result in financial losses that are difficult to recover in the long term.Ĭ. Set a competitive yet sustainable price: While the aim is to offer a low price, it is important to strike a balance between competitiveness and sustainability. This information will help determine the optimal pricing strategy.ī. conduct thorough market research: Before entering a new market, it is crucial to conduct comprehensive market research to understand the price sensitivity of customers and the competitive landscape. When implementing penetration pricing, there are a few key tips to keep in mind to maximize its effectiveness:Ī. Tips for Implementing Penetration Pricing This aggressive pricing strategy allowed Uber to rapidly gain market share and become the dominant player in the industry.ģ. By pricing the iPhone significantly lower than its competitors, Apple was able to quickly capture a sizable market share and establish itself as a leader in the smartphone industry.Īnother example is the ride-hailing service, Uber, which entered new markets by offering discounted fares to attract customers away from traditional taxi services. One notable example is the tech giant, Apple, which adopted this strategy when launching its iPhone back in 2007. Numerous successful companies have utilized penetration pricing to penetrate new markets and gain a competitive advantage. While this strategy may result in an initial loss of profit, it can be highly effective in the long run by capturing a substantial market share and driving customer loyalty. This approach aims to attract a large number of customers by offering them a competitive price, thereby creating a strong customer base and establishing a foothold in the market. Penetration pricing is a pricing strategy that involves setting a relatively low initial price for a product or service to quickly enter a new market and gain a significant market share. Intuit accepts no responsibility for the accuracy, legality, or content on these sites.Penetration pricing: Penetration Pricing: How to Enter a New Market and Gain Market Share 1. Intuit does not endorse or approve these products and services, or the opinions of these corporations or organizations or individuals. We provide third-party links as a convenience and for informational purposes only. Readers should verify statements before relying on them. does not warrant that the material contained herein will continue to be accurate nor that it is completely free of errors when published. Accordingly, the information provided should not be relied upon as a substitute for independent research. does not have any responsibility for updating or revising any information presented herein. No assurance is given that the information is comprehensive in its coverage or that it is suitable in dealing with a customer’s particular situation. Applicable laws may vary by state or locality. Additional information and exceptions may apply. This content is for information purposes only and should not be considered legal, accounting, or tax advice, or a substitute for obtaining such advice specific to your business. If you make a bold offer, you better be able to back it up.A free product (even for a limited time) can be the ticket for long-term awareness and sales.There are two critical takeaways from Sunny Co Clothing’s penetration pricing stunt: Nevertheless, Sunny Co emerged from the situation with thousands of new loyal followers and an infamous legacy. But there was a problem: the sudden surge in sales forced the brand to cap the offer at 50,000 swimsuits, which caused a backlash on social media. More importantly, 346,000 orders came through. Word of mouth propelled Sunny Co’s Instagram following from 7,000 to more than a quarter-million overnight. In the summer of 2017, two students at the University of Arizona came up with an idea to get attention for their swimwear line, Sunny Co Clothing, in a saturated marketplace: anybody who posted a picture of their classic red swimsuit (valued at $64.99) on Instagram would get a free one-just pay shipping. Clothing: The pros and cons of a viral swimsuit giveaway
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