What are the disadvantages of penetration pricing?
An example of an AI chatbot conversation about the drawbacks of penetration pricing strategies.
What are the disadvantages of penetration pricing?
Penetration pricing can lead to lower profit margins initially, and it may also attract price-sensitive customers.
How does it affect brand perception?
It can harm brand perception if customers associate low prices with low quality, making it hard to raise prices later.
Are there any long-term risks?
Yes, long-term risks include dependency on low prices and potential price wars with competitors.
What industries is it most commonly used in?
It's commonly used in industries like technology, consumer goods, and subscription services to quickly gain market share.
Can you give an example of a company that used this strategy?
Sure! Netflix initially used penetration pricing to attract subscribers before gradually increasing their prices.
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