Which of the following is a reason that a marketer would choose a penetration pricing strategy?

• A. To quickly gain market share by offering a low initial price
• B. To avoid attracting competitors to the market
• C. To maximize short-term profits by setting a high price
• D. To signal high product quality to consumers

Answer: (A)

Verified step by step guidance

1. Understand the concept of penetration pricing: it is a strategy where a firm sets a low initial price to attract customers quickly and gain market share.
2. Analyze the goal of penetration pricing, which is typically to enter a competitive market and build a customer base rapidly rather than maximizing short-term profits.
3. Compare the options given with the purpose of penetration pricing. For example, setting a high price to maximize short-term profits contradicts the idea of penetration pricing.
4. Recognize that penetration pricing aims to attract many customers quickly, which aligns with offering a low initial price to gain market share.
5. Conclude that the correct reason for choosing penetration pricing is to quickly gain market share by offering a low initial price.