Question

Lysol sanitizing wipes entered the market at a low sales price and was supported by heavy couponing. As the initial trial period passed, the pricing slowly rose and the couponing became more infrequent.

This activity is an example of penetration pricing.
True or False?

Answer 1

Answer: True

Lysol sanitizing wipes used the penetrating price strategy.

Step-by-step explanation:

Penetrating price is a marketing/ pricing strategy in which an organization sets their initial price low in order to gain the market and then gradually begins to increase the price, this strategy helps to attract customers to a product or service.

The strategy of lowering the price helps a new product or service to circulate and take over the market from it's competitors.

Goals of penetrating price strategy:

• To capture the market.

• Create customers who will become loyal to the brand.

• Get the attention of customers off their competitors.

• To compete with their competitors

• Force competitors out of market etc.

Answer 2

True

Step-by-step explanation:

Penetration pricing represents a marketing strategy employed by organisations with the goal of attracting customers to new products or services. These products or services are often offered at lower prices specifically to encourage people to test them and thus bring their awareness to the market, in other words, penetrate the market.

At times penetration pricing is not only used to acquaint consumers to a product, it is also used to thin out a competitor's customer base. Specifically, low prices and as stated in the question heavy couponing are strategies that are used to attract a wide number and range of customers to a product.

Lysol therefore, used penetration pricing based on low sales price and heavy couponing to attract consumers to its sanitizing wipes and when a satisfactory result had been achieved, the pricing rose and the couponing reduced. However, the consumer base is already established.