Xiaomi offers high-quality smartphones at a fraction of the price of its competitors, which has helped it to gain market share in China and other developing countries. Xiaomi: Xiaomi, a Chinese smartphone maker, uses penetration pricing to compete with established players like Apple and Samsung.This pricing strategy helped Uber rapidly expand its user base and establish itself as the dominant ride-sharing platform. Uber: Uber used penetration pricing when it launched in new markets by offering deeply discounted rides to attract new customers and gain market share.This aggressive pricing strategy helped Amazon to dominate the e-reader market quickly. However, in 2009, it introduced the Kindle 2 at a much lower price of $299 and then dropped it even further to $139 in 2010. Amazon: When Amazon launched its Kindle e-reader in 2007, it priced the device at $399.Here are some examples of penetration pricing: Additionally, customers may become accustomed to low prices and may resist price increases in the future. However, it can also be risky, as operating at a loss can strain a company’s finances in the short term. Penetration pricing can be an effective strategy for companies that can quickly scale up production and reduce costs as sales volume increases. ![]() By offering a lower price than competitors, a company can attract price-sensitive customers looking for the best deal. Penetration pricing strategy is typically used when a company is entering a new market or introducing a new product and wants to capture market share from existing competitors quickly. The goal of penetration pricing is to increase sales volume and establish a foothold in the market, even if it means operating at a loss initially. Penetration pricing is a pricing strategy in which a company initially offers a product or service at a very low price in order to gain market share and attract customers quickly. The retailer sets the product’s price based on the production cost and adds a markup for profit.
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