Which concept best describes the strategy of setting a low introductory price to gain market share?

• A. Discount
• B. Markup
• C. Skimming Price
• D. Penetration Price

Answer: (D)

Penetration pricing is a strategy that sets a low introductory price to attract a large number of customers quickly and gain market share. The idea is to create a high-volume sale base, build brand awareness, and potentially deter new competitors who see the market as price-sensitive. Once the product has captured a substantial share, prices can be adjusted higher or new, differentiated options can be introduced to protect margins.

This approach differs from a discount (temporary price cut for specific groups or times), a markup (the amount added to cost to set the selling price, not a strategy aimed at market share), and skimming pricing (starting with a high price to maximize early profits). Therefore, the concept described is penetration pricing.