Penetration pricing strategy has several benefits. From your list, the following options are typically associated with a penetration pricing strategy:
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Gaining market share - By setting a low initial price, companies can attract more customers quickly, increasing their market share.
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Discouraging competitors - Low prices can deter new entrants or competitors from entering the market, as they may find it difficult to compete with the established low prices.
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Decreasing production costs as volume increases - With higher sales volume resulting from the low pricing strategy, companies may achieve economies of scale, which can reduce per-unit production costs.
However, "Adding perceptions of quality" is generally not a benefit of penetration pricing. Typically, low prices can sometimes lead consumers to perceive a product as lower quality.
Therefore, the correct answers are:
- Gaining market share
- Decreasing production costs as volume increases
- Discouraging competitors