What is the main goal of penetration pricing in its initial stage?

• A. To maximize short-term profit
• B. To quickly gain market share
• C. To deter competitors with high price
• D. To simplify accounting

Answer: (B)

The main aim of penetration pricing at the start is to quickly gain market share by setting a low entry price. A low price makes the product very attractive to price-sensitive customers, encouraging a high volume of sales and helping the business establish a large customer base fast. This approach aims for long-term profitability through high sales volume, brand visibility, and potential cost advantages as production scales up. It’s not about chasing short-term profit at the outset, nor about using high prices to deter competitors or about simplifying accounting.