![]() PENETRATION PRICING EXAMPLES – NETFLIX AND GILETTE Of course, some of your customers are dissatisfied, but the vast majority quickly agrees to new prices, because the product is simply worth them. Now, it’s the right time to raise the price. Once they purchase it, they realize that it’s excellent and suits their needs. The reduced price encourages many people to buy your product. That’s why you decide to lower the initial price, making it very attractive. The idea is simple: You start with the new product therefore, you need to acquire as many customer s as possible in order to get word of mouth and publicity. We’ve already mentioned this approach in our recent article about pricing strategies in e-commerce. When it comes to introducing new products, penetration pricing is one of the most commonly utilized strategies (together with price skimming). What do you need to know about this strategy? The penetration pricing strategy ![]() And this is where penetration pricing comes in handy. ![]() This way, market penetration equals market share for a given company.įor obvious reasons, companies try to get as high market penetration as possible, especially when it comes to new products and services. Let’s use an example: If you produce bikes and every fifth bike in the country is made by your company, your market penetration is 20%. In a nutshell, market penetration is a percentage measure of how much a specific product is being used or purchased by customers in relation to the total estimated market of this particular product. 4 Penetration pricing in e-commerce Market penetration definition ![]()
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