Question

Electrowhip, a company that manufactures blenders and electric whisks, has decided to use a market-penetration pricing strategy. Which of the following, if true, proves their decision to be a wise one?
a. Electrowhip's competitors utilize social media for marketing their products.
b. Electrowhip sells products whose image and quality support high prices.
c. Electrowhip operates in a market with many competitors.
d. Electrowhip does not operate in a price-sensitive market.
e. Electrowhip's products are intended to appeal to the elite in society.

Answer 1

Answer:

The answer is C. Electrowhip operates in a market with many competitors.

Explanation:

First, let re-visit to the penetration pricing strategy definition. It is the strategy where price is set low so that firm can gain market share as quick as possible on the selling point of low price.

With the above definition, a. is not relevant, b. is not correct, d. is not correct because if the market is not price-sensitive, the low price will not be the selling point for them to gain market share, e. is not correct as low pricing is not an appropriate strategy to approach elite level.

With C, when there are many competitors in the market and Electrowhip is unable/ unwilling to design a unique product toward a pre-determined sub-section in market share, penetration pricing strategy seems to be the most appropriate strategy for Electrowhip.