Our Sydney marketing consultants have seen penetration pricing used mainly by new businesses to grow their market share. According to this strategy, the price of a product begins at a low price in order to persuade customers to choose the new brand, with the hope of demand increasing as the price slowly increases.

Penetration pricing can be used in a number of ways and can hold many benefits to the brand. Discount stores and wholesalers use this pricing strategy to sell new products in their stores by advertising their low prices in comparison to their competitors. Our marketing consultancy in Sydney understand that these businesses may not be making large profit margins at the start of their price penetration strategy, however as more customers become interested in the product, the opportunity to increase prices becomes possible.

Our marketing consultants in Sydney have noted that the advantages of penetration pricing outweigh the disadvantages, with the following advantages being most prevalent;
- Consumers will return to catch those low-price deals repeatedly, creating a loyal customer base for the business
- There is limited competition as competitors are hesitant to drop their prices that low, and they don’t have enough time to react.
- Low prices will encourage word of mouth advertising, increasing brand recognition and the demand for the product

For more information regarding the benefits of a penetration pricing strategy, please contact our Sydney marketing consultants today.