![]() Your organization needs to be able to compose a digital selling pathway based on your unique business needs. How PO&M Software Can Facilitate Your Pricing Strategy In such an inflation environment, businesses must act with more speed, promptly refining their pricing strategies - meaning penetration pricing might not be the best route to take if businesses wish to remain agile and competitive. In this current post-COVID era, suppliers are grappling with supply shortages and inflation is putting pressure on companies operating across many industries. This can lead not only to lower prices but also lower profits for an extended period of time.Īnd these are just the general drawbacks. Furthermore, if the competition also lowers their prices, companies might find themselves in a price war. This means that an increase in sales volume may not necessarily lead to an increase in profits if prices must remain low to keep new customers. Customers may choose the business’s new offering initially, but switch to a competitor once prices go up. Why? Because when prices do eventually increase in the future, customer loyalty will be tested. While this pricing strategy may help businesses acquire a lot of customers and decent sales volume initially, companies that employ it will not only need a lot of customers but a lot of loyal customers, in order to ensure it’s successful. Penetration pricing can also increase goodwill customers that are able to find a new product or service at a bargain price are more likely to return to the company in the future. Outpace the competition: Not only can you draw customers away from competitors, penetration pricing can also help drive competitors out of the market. ![]() Create demand: This pricing strategy can also create demand for the new product quickly.Increase market share: A new product at a lower price can help new companies enter the market and increase market share quickly. ![]() Here are some of the biggest benefits of penetration pricing: What Are the Benefits of Penetration Pricing?
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