Question

Sound Stream Corp. is releasing a range of headphones, earphones, and acoustic devices for music enthusiasts in a new market. To enter the market and gain market share rapidly, Sound Stream slashes the prices of its products and markets its products aggressively. In this scenario, which pricing strategy is Sound Stream Corp. using

Answer 1

Penetration pricing

Step-by-step explanation:

Penetration pricing is a pricing strategy where the sellers of a new product set the price for their product unusually low. This is to entice consumers to purchase the product

Advantages of penetration pricing

1. it increases market share of the firm conducting the penetration pricing

2. it increases the sales of the firm practicing the penetration pricing

Disadvantages of penetration pricing

1. Profit earned by the company might be too low

2. once a low price has been set for the good, it might be difficult to raise it later as it may drive consumers away.