Final answer:
The strategy called penetration pricing involves setting a low price for a new product initially to attract customers and gain market share. It differs from price bundling, which involves selling multiple products or services together at a discounted rate.
Step-by-step explanation:
The pricing strategy in which a new product is offered at a low price for a limited period of time to attract customers is known as penetration pricing. This strategy is used by companies to gain market share by encouraging customers to try the new product at a reduced risk due to the lower cost. Over time, once a customer base is established and product acceptance is achieved, the company may increase the price to a more sustainable level. It's an effective way to enter a competitive market and is often used by startups and new entrants.On the other hand, price bundling is a different concept where a firm offers multiple products or services together at a discounted price compared to purchasing each item separately. This can be a common and legal practice that offers value to customers and can help increase sales. Examples of bundling include cable companies offering internet, phone, and television services as a package, or software bundles included with new computer purchases.