PENETRATING PRICING STRATEGY

Penetrating Pricing Strategy

CHAPTER 1: INTRODUCTION

Background of the Study

The study is related to the penetrating pricing methods can help in facing the competition and its impact on customers. Pricing in modern markets is a process which is set by a company to mark what it will receive for its products. The cost of producing goods includes the cost of raw materials, labour, management, profits for shareholders, and other factors. The actual price will be the cost the company sets after it has averaged in costs for incentives, competition, discounts, and promotions. The importance of penetration pricing strategy for the marketing was subjected to some changes in recent decades. With increasing prosperity to more buyers could afford more and more products. Nevertheless, it should not be for most companies a key differentiator from the competition. For initial starting point of differentiation, the better fulfilment of his desires and needs of consumers. However, if the customers on a market demand, especially low-priced products, such as in current years in diverse markets - for example, staple foods - increasingly the case was so, this underlines the importance of pricing.

The importance of penetration pricing, the price from a customer perspective the main determining factor is its cost. And remember: Customer satisfaction occurs when the buyer's subjective value higher than the costs estimates. Prices must first determine if a company brings a new product on the market. Besides prices but may have to be changed over time. Overall, it is important to note that have mistakes in the pricing policy is often more severe consequences than, such as erroneous decisions on the budget allocation within the communication policy. And that the determination of prices has therefore, to be done with exceptional care and taking into account the relevant factors.

Rationale of the Study

To study the importance of pricing strategy in this global competitive environment

Aims and Objectives

The objective of the study is to know what effects penetrating pricing strategy makes on the competitors and on the customers. In the penetration strategy, companies seek ways to introduce a new product in a market that ignores the characteristics of the new offer. So, concentrate efforts on reducing prices as possible in order to prevent from becoming brakes for purchase. This idea of selling at the lowest price is determined by the competition and what the competitor sees on this product. In either case, this strategy aims to be below the competitive price and below the customer's perception. This strategy is commonly applied when there is evidence of strong potential market, or when the crowd of competitors is remarkable. In such market conditions, it is configured as the appropriate strategic option, since it managed to introduce the product quickly and make it known in a relatively short time.

Research Questions

Does penetrating pricing strategy help strike the competitors in the industry?

How penetrating pricing method help in attracting the customers and gaining the market share?

CHAPTER 2: LITERATURE REVIEW

Pricing strategy must be aligned with the overall goals of the company and ...