Question

Which of the following is a reason that a marketer would choose a penetration pricing strategy?

A) to ensure the company has the ability to increase prices once demand decreases
B) to focus on the rapid achievement of profit objectives
C) to appeal to different consumer segments with different levels of price sensitivity
D) to create markets for highly technical products
E) to discourage competition from entering the market

Answer 1

A penetration pricing strategy can be used to focus on rapid profit attainment, create markets for technical products, and discourage competition from entering the market. Option b.

Step-by-step explanation:

A marketer may choose a penetration pricing strategy for several reasons. One reason is to focus on the rapid achievement of profit objectives. By setting a low initial price, the marketer aims to attract a large number of customers quickly, resulting in higher sales volume and potential market share.

Another reason is to create markets for highly technical products. Products with advanced or specialized features may face limited demand initially, so a lower price can help generate interest and drive adoption. Lastly, penetration pricing can be used to discourage competition from entering the market.

By setting a lower price, the marketer can make it difficult for new competitors to compete on price, thus reducing the chances of market entry.

So Option B.