As we discussed earlier in our blog, finding the right pricing strategy is an essential key for the success of your business. This article takes a look at Penetration Pricing, a strategy that aims to increase market share of a product, providing the opportunity to increase price once this objective has been achieved.
Penetration pricing is the pricing technique of setting a relatively low initial entry price, usually lower than the intended established price, to attract new customers. The strategy aims to encourage customers to switch to the new product because of the lower price.
Price is one of the four main elements in the marketing mix('4 Ps': product, price, place and promotion). All the elements of the marketing mix influence each other. They make up the business plan for a company, and handled in the right way, can provide exceptional success for your company.
In an earlier post we looked at four reasons to test your pricing TODAY! Still not convinced? Take a look at these ten quotes:
- “The single most important decision in evaluating a business is pricing power... If you’ve got the power to raise prices without losing business to a competitor, you’ve got a very good business. And if you have to have a prayer session before raising the price by 10 percent, then you’ve got a terrible business.”– Warren Buffett, American business magnate ["Top 40 Buffet-isms: Inspiration to become a better investor", 2013, Forbes].