Commercial Applications
"Penetration pricing leads to setting a high initial price." Justify the statement for or against and give a reason.
Answer
Against the statement — Penetration pricing does NOT lead to setting a high initial price. Reason:
Penetration pricing involves setting a low initial price in the early stage so as to make the brand quickly popular and to maximise the market share. The manufacturer aims to sell to the masses by offering an attractive low price. The strategy of setting a high initial price is called skimming pricing, not penetration pricing. For example, 'Nirma' detergent powder used penetrating pricing (low initial price) to capture the mass market.
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