Penetration pricing

Penetration pricing is a pricing strategy especially appropriate for new product pricing, where the price of a product is initially set low to rapidly reach a wide fraction of the market and initiate word of mouth promotion.^[1] The strategy works on the expectation that customers will switch to the new brand because of the lower price. Penetration pricing is most commonly associated with marketing objectives of enlarging market share and exploiting economies of scale or experience.^[2]