What is penetration pricing?

Penetration pricing is the pricing technique of setting a relatively low initial entry price, a price that is often lower than the eventual market price. The expectation is that the initial low price will secure market acceptance by breaking down existing brand loyalties. Penetration pricing is most commonly associated with a marketing objective of increasing market share or sales volume, rather than short term profit maximization.

Penetration pricing, is a price below its normal market value, often used to enter (or penetrate) a new market or to try an old product in a new market.

This is often used to either buy a market share (before creeping prices up to get a profitable return) or to raise brand awareness.

It is a common practice to "buy" market share, references and to off load older products to raise brand awareness before a new product is launched.

Price that invites trial/sampling in a new market. May be used in stagnating markets too, to regain added footfall. Normally used by McDonalds throughout the year.