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Penetration pricing refers to4/10/2024 ![]() To avoid losing this engagement once you want to raise the prices, you can design different pricing strategies, such as creating personalised offers for your most frequent shoppers, opening private sales, or, to return to the example of the telephone companies, signing ironclad contracts with certain customers. In the medium term, you won’t only be attracting new customers, but also earning the loyalty of your regular buyers. This happened more than a decade ago when new phone companies burst onto the scene with ridiculously low prices compared to the regular providers. ![]() This tactic can even change the perception of the target audience, who may begin to question why they paid more for the same item and what its real value is. One recommendation is to accompany your launch with an efficient marketing campaign, including paid media if you want to earn even greater visibility. Thanks to a penetration pricing strategy, the company can achieve a large number of initial sales to start making that new product or service profitable. ![]() Customer acquisition and loyaltyĮntering the market with prices that are significantly lower than the competition will undoubtedly attract the attention of potential customers. Analysing this information will allow you to define a sales value that matches the specific needs of the brand. Or they could be users that are motivated by price and aren’t afraid of trying products from new companies. For example, the target audience may be made up of only customers that are loyal to certain brands, regardless of their prices. To start with, you must be very clear about the positioning of your brand, your target audience, and the situation in the market where your products or services are going to move. In this context, opting for penetration pricing will provide retailers with three important competitive advantages, which we’ll explain in this article. This low-price strategy is most effective in markets with high elasticity of demand. Many eCommerce businesses turn to penetration pricing strategies to ensure the profitability of these new items. Establishing the most appropriate price for a new product or service that’s going to enter the market is essential to achieve success.
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