Please give an example of a current product or service using

Please give an example of a current product or service using a penetration pricing strategy. please explain?

Solution

Penetration pricing occurs when a company launches a low-priced product with the goal of securing market share. Penetration pricing strategy is generally used by late comers in the market. This pricing is typically used when the market is saturated or there are already many variants of the same product present in the market. Penetration pricing gives an edge to the company because many customers are attracted on the basis of price, or value for money and switch brands to adopt the brand offering low pricing on similar products.

Brand Mokai – A cider brand is a current product using a penetration pricing strategy.

Top Danish cider brand Mokai has been trying to approach the East African market with initial focus on Tanzania. As part of the market research and strategy, they have been analyzing their competitors and what kind of ciders can already be found on the market. As the Tanzanian alcohol market can be described as quiet mature, one of the most powerful ciders on the market being Savanah. Despite some differences in taste and design as well as target market, as Mokai is generally targeting the female sector compared to Savanah which is targeting both genders, Mokai had to come up with a strategy to capture consumers of Savanah.

So they have been entering the market through a penetration pricing strategy, by offering a low price for their cider during the introductory phase. The main purpose was to increase market share and sales volume.