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?

a) Penetration pricing
b) Psychological pricing
c) Price skimming
d) Profit maximization
e) Prestige pricing

Answer 1

a) Penetration pricing.

Step-by-step explanation:

Penetration pricing is defined as a pricing strategy that is used by companies to penetrate new markets. Prices are initially reduced to attract buyers. Buyers are willing to obtain the products at lower price.

Adoption of the product is expected to quickly capture market share, also it relies on word of mouth.

Sound Stream Corp. is using penetration pricing when it released a range of headphones, earphones, and acoustic devices. It slashes the prices of its products and markets its products aggressively to gain market share.