Penetration Pricing


	Penetration Pricing
	Advantages Low priced new products may attract high sales volumes which makes it harder for a competitior to break into the market High sales volumes help to cut production costs per unit, as the producers can buy in bulk and keep production costs down Achieving high sales volumes ensures that shops will provide high distribution levels and good in store displays	Disadvantages Pricing low may affect the brand image, making the product look cheap It may be hard to gain distribution in up market stores due to mass market pricing Pricing on value for money can cause customers and competitiors to become very price sensitive
	Evaluation

Low priced new products may attract high sales volumes which makes it harder for a competitior to break into the market
High sales volumes help to cut production costs per unit, as the producers can buy in bulk and keep production costs down
Achieving high sales volumes ensures that shops will provide high distribution levels and good in store displays

Pricing low may affect the brand image, making the product look cheap
It may be hard to gain distribution in up market stores due to mass market pricing
Pricing on value for money can cause customers and competitiors to become very price sensitive

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