Step 2 of 2. By creating a mass market for the product, the company can establish itself as a brand leader. But the may get their goods at one-third the price you do, thanks to their volume purchasing. About the Author Chris Joseph writes for websites and online publications, covering business and technology. If you are stuck with a Solution Advantages, Disadvantages of Penetration Pricing Homework problem and need help, we have excellent tutors who can provide you with Homework Help. If a company employs a market penetration policy of offering lower prices for a specified period to attract new customers, the customers may not respond when the price returns to normal.
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Accessed 19 November Consumers who are not able to purchase the product may become dissatisfied with the company and purchase a similar item from the competition instead. Rate of diffusion or adoption is the speed at which it is accepted. Companies that are new to exporting cannot absorb losses arising out of penetrative price. It is not uncommon for razor blades to cost twice as much as a razor, and although the razors are inexpensive, they are never so cheap that the included blades are cheaper than blades alone. Keep Calm and Be a PricingHero.