Which type of pricing is used when a firm's objective is to gain as much market share as possible?

• A. Premium pricing
• B. Cost-plus pricing
• C. Penetration pricing
• D. Price skimming

Answer: (C)

Verified step by step guidance

1. Understand the objective of the firm: gaining as much market share as possible means the firm wants to attract a large number of customers quickly.
2. Recall the definitions of the pricing strategies: Premium pricing involves setting a high price to signal quality; Cost-plus pricing adds a markup to the cost; Price skimming sets a high initial price to maximize profits from early adopters; Penetration pricing sets a low price to quickly attract customers and increase market share.
3. Identify which pricing strategy aligns with the goal of maximizing market share: since penetration pricing uses low prices to attract many customers rapidly, it fits the objective.
4. Conclude that the pricing strategy used when the firm's objective is to gain as much market share as possible is penetration pricing.
5. Remember that penetration pricing often involves setting prices below competitors initially to build customer base before possibly raising prices later.