All about penetration pricing strategy | Amazon Services

As an e-tailer, you must already know that it’s all about setting the right price when it comes to effectively catering to your target audience. A well-articulated penetration pricing strategy will help you break into an already established product category and gain traction. Initially, you’ll have to put up your offerings for sale at a low price with the idea of using the wide price gap to push customers toward your brand. The fundamental idea is to advertise your products as a cost-effective option in comparison to your competitors.

By adopting penetration pricing strategy as a part of your marketing initiative, you can:

Shape customer preference

Customers are psychologically inclined toward purchasing products which are priced at a rate that is substantially lower than what the nearest competitor is offering. Usually, the adoption rate of a new product is exponentially high when you embrace penetration policy as part of your pricing strategy.

Edge out your competition

If you use penetration pricing to carve out your niche in the market, your competitors are likely to be caught off guard. They are left with very little time to react and even if they manage to do so, they will find themselves in a position where they are unable to match your price point. This is because an established line of business has to sustain a stable line of income to meet expenses. Since cutting down on pricing is not an option for your competitors, you are bound to gain some leeway during your initial days.

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All about penetration pricing strategy.