Question

Sjcam used a penetration pricing strategy to introduce its Legend action camera to compete with the latest GoPro offering. Which of the following conditions would argue for using a penetration pricing strategy when introducing this new camera?a. A large potential market exists, even at a high price.
b. Technological problems still exist for competitors, prohibiting their entry into the market for at least six months.
c. Increasing volume substantially reduces production costs.
d. Consumers perceive a price-quality relationship.
e. The product is relatively price insensitive

Answer 1

Answer:

a. A large potential market exists, even at a high price.

Explanation:

Penetration pricing is often used to support the launch of a new product, and works best when a product enters a market with relatively little product differentiation and where demand is price elastic – so a lower price than rival products is a competitive weapon.

Therefore the conditions that would argue for using a penetration pricing strategy when introducing this new camera, is when a large potential market exists, even at a high price.so that using a lower price will attract customers to the new product and part of the potential market will be gained.