Supermarket chains use penetration strategies to sell niche products or products with a higher margin such as organic foods. Once a purchase has been made you should follow up with a customer loyalty strategy. The modus operandi of a price penetration strategy will be determined by the type of industry, the amount of competition and the quality of your product or service.įor example, a subscription-based website may offer a first month trial period for free and then use a competitive pricing strategy thereafter.Įcommerce business owners in competitive markets typically launch with a buy-one-get-one-free (BOGOF) campaign to attract customers on the lookout for a bargain. This strategy starts with a high price and is gradually lowered. In contrast, brands with a product that has low competition are better placed to use a price skimming strategy. The key to psychological pricing is to simplify the decision-making process for consumers and make them think they have walked away with a bargain - or at the very least made a purchase that offers good value for money. After a certain period or initial offering, you increase the price point to a level that will turn a profit. A lower price point can help brands to penetrate the market, grab the attention of consumers and establish a foothold in the early stages of your business. This pricing strategy is typically used in highly competitive markets. The strategy helps raise product awareness, accrue a customer base and build market share. The goal of a price penetration strategy is to attract the attention of customers and entice them away from your competitors. The strategy involves offering lower prices than any of your competitors for the initial offering. Penetration pricing is a marketing strategy used by new businesses to break into the market and increase sales volume from the outset. In short, a penetration pricing strategy will only work if the product you are selling is of higher quality than your competitors. Quality is more important than brand name. Although reports reveal that 87% of consumers shop around for the best deals, only 8% of the revenue generated by eCommerce stores comes from repeat customers.Īlthough brand loyalty is on the decline, 79% of consumers rank quality as their most important purchasing decision. Consumer psychology is built around the concept of associations. Retaining customers is the key to a successful penetration pricing strategy. There is also a risk that customers will return to a competing brand once you raise prices. Whilst a penetration pricing strategy can increase your sales volume and market share, lower costs mean lower profit margins. A penetration pricing strategy involves setting low prices to raise curiosity and persuade consumers to switch brands. Businesses entering the marketplace with a new product could consider penetration pricing as a means of capturing market share.
0 Comments
Leave a Reply. |
AuthorWrite something about yourself. No need to be fancy, just an overview. ArchivesCategories |