BUSINESS PROJECT

Market

PENETRATION
Trends

PRICING
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by: Saanvi, Maheen, Omniya, Feedback

Ibraheem and Sneha
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 INTRODUCTION
DEFINITION

Businesses use penetration pricing as a marketing tactic to attract customers to a new

product or service by offering a lower price during its initial release. A reduced price
assists a new product or service in breaking into the market and luring customers
away from competitors.

EXAMPLES
Netflix
Netflix subscription fees are increasing, or their one-month free trial period is coming to an end. Nonetheless, despite occasional
complaining, human beings are completely satisfied with paying higher subscription fees for an endless flow of accurate media
content.
Gillette
It has been able to maintain its market leadership for years by giving out razors for free or selling them at a lower price than its
competitors.
Providers of smartphones
With a penetration programme, Android hopes to gain a larger share of the market. When compared to Apple, Android phones, with
Samsung leading the pack, are offered at a significant discount or at significantly lower prices.
 ADVANTAGES
High adoption and diffusion: Penetration pricing enables a company
to swiftly gain client acceptance and adoption of its product or
service.
Market dominance: A penetration pricing plan usually catches
competitors off guard and gives them little time to react. The
business is able to take advantage of the opportunity to convert as
many clients as possible.
Economies of scale: A pricing strategy that creates a large volume of
sales allows a company to achieve economies of scale and lower its
marginal cost.
Increased customer loyalty: Customers who find a good deal on a
product or service are more likely to return to the company in the
future. Furthermore, increasing goodwill generates favourable
word-of-mouth.
DISADVANTAGES
Pricing expectation: When a firm uses a penetration pricing
strategy, customers often expect permanently low prices. If prices
gradually increase, customers may become dissatisfied and may
stop purchasing the product or service.
Low Customer Loyalty: Penetration prices usually help
organizations with low customer loyalty. These customers may
switch to competitors if they find a better deal. Price cuts are
effective for immediate sales, but they rarely generate customer
loyalty.
Brand Image Damage: Low prices can damage your brand image
and make your customers perceive the brand as cheap or of poor
quality.
Inefficient long-term strategy: Price penetration is not a viable long-
term pricing strategy. It is usually a better idea to approach the
marketplace with a pricing strategy that your company can live
with, long-term. While it may then take longer to acquire a sizeable
market share, such a patient, long-term strategy is more likely to
serve your company better overall, and less likely to expose you to
severe financial risks.
 HIGH COLLABORATIVE

PERFORMANCE Empathetic:

LEARNING We have worked together as a group to

finish this project and we have decided
who is doing what works.

ANALYZING CREATIVE

By understanding the main aim of the

Creating: We used creating to get a
project, we used analysis to investigate
variety of results. We've put together a
what penetration pricing is and how it
well-thought-out project.
improves total sales and performance.