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When Amazon introduced the latest Kindle Fire tablet at $49.99 and the average price of competitive models was $323, Amazon was using a "penetrating pricing strategy".
What is penetrating pricing strategy?
Particularly, rival pricing has a significant influence on penetration pricing. With this pricing model, a fresh good or service is provided for less money.
Some key features of penetrating pricing strategy are-
- The tactic enables a first-time product to draw in new clients by drawing them away from other businesses.
- By presenting a new product or service at a cheaper price during its initial release, firms can draw people to it through the marketing tactic known as penetration pricing.
- A new product or service can enter the market more easily and draw customers away from rivals by offering a lower price.
- The idea of a penetration strategy is to work aggressively to significantly increase one's share of total sales in a market.
- A business may often make things or purchase goods at a lesser cost as a result of the increasing sales volume, which increases its profit margin.
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