Question

Which of the following statements about penetration pricing is most accurate? Multiple Choice A) Penetration pricing is more effective in a marketplace with price-sensitive consumers. B) Penetration pricing encourages competitors to enter a market. C) Penetration pricing is a profit-oriented approach to pricing. D) Penetration pricing usually precedes a skimming pricing. E) Penetration pricing is a cost-oriented pricing method.

Answer 1

Answer: Option A

     

Explanation: In simple words, it refers to the pricing strategy in which the firm initially charge a lower price of product to attract the customers and make a strong position in the market.

Hence it is effective only on those markets where the customer gives value to price more than the quality and assurance he is getting from the existing product.

Thus, from the above we can conclude that the correct option is A.