Which pricing policy involves charging a relatively low price initially to reach the mass market?

Which pricing policy involves charging a relatively low price initially to reach the mass market?

• A. Penetration Pricing
• B. Skimming Pricing
• C. Bundle Pricing
• D. Premium Pricing

Answer: (A)

Penetration pricing involves charging a relatively low price initially to reach the mass market. By starting with a low price, a firm can attract a large number of customers quickly, gain market share, and build sales volume. This approach often aims to create economies of scale and deter competitors, making it harder for others to enter the market on price alone. Other options work differently: skimming pricing sets a high price at launch to maximize early profits from limited demand; bundle pricing sells multiple products together at a single price, often to increase perceived value; premium pricing keeps prices high to signal quality or prestige rather than broad market appeal.

Penetration pricing involves charging a relatively low price initially to reach the mass market. By starting with a low price, a firm can attract a large number of customers quickly, gain market share, and build sales volume. This approach often aims to create economies of scale and deter competitors, making it harder for others to enter the market on price alone.

Other options work differently: skimming pricing sets a high price at launch to maximize early profits from limited demand; bundle pricing sells multiple products together at a single price, often to increase perceived value; premium pricing keeps prices high to signal quality or prestige rather than broad market appeal.