Final answer:
The idea that market penetration pricing involves setting high price levels to build market share is False. Market penetration pricing aims to set low prices to attract a large customer base in competitive markets.
Step-by-step explanation:
The statement that market penetration pricing strategy calls for setting price levels high enough to quickly build market share is False. Instead, market penetration pricing typically involves setting a low price to attract a large number of customers and achieve a high market share. This pricing strategy is used when the product or service is similar to existing offers in the market and the business is seeking to enter into a market with established competitors.
It's important for a business to consider the competitive landscape when pricing its products. In a scenario described in the provided passages, where a firm's product is the same as many others in the market, raising the price above competitors would more likely cause customers to switch to purchasing from rival firms, thereby resulting in lost sales. Therefore, if competitive pricing is in place, a firm would likely not raise its prices unless offering additional value or differentiation in its product.