Question

When a new product or service is launched, companies that use a ______ strategy will attempt to attract customers quickly by offering a very low price at first.

Answer 1

Answer:

Penetration strategy

Explanation:

Penetration strategy is an aggressive marketing concept that seeks to establish a sizeable market share for a new product. Marketers will offer a low price and carry out sales promotions to improve the attractiveness of the product. The objective of this strategy is to entice customers to buy the new product, thereby creating a market for it.

The penetration strategy will work if consumers are price sensitive. The new low price will attract sales. If the company raises the price later to make profits, demand may decrease. For this strategy to work, the product must be of high quality. Competitors may lower prices of their products in the medium term giving rise to price wars.