What is penetration pricing primarily used for?

Penetration pricing is primarily utilized to attract customers to a new product or service. This strategy involves setting a lower initial price to encourage consumers to try the product, thereby increasing market share quickly. When a new product enters the market, consumers may be hesitant to purchase it due to unfamiliarity or perceived risk. By offering the product at a reduced price, businesses can entice a larger audience, facilitate product trials, and build initial sales volume.

As customers start to experience the product and find value in it, the business can later adjust prices or enhance marketing strategies to maintain interest and foster repeat purchases. This approach not only helps in positioning the product within a competitive market but also paves the way for long-term success by overcoming the barriers of entry associated with new products. The focus is primarily on customer acquisition and market entry rather than any of the other options, which relate to different facets of marketing or production strategy.