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What is the main reason for a business using penetration pricing? (A) To maximise profit per unit (B) To gain short-term market share (C) To develop a reputation for quality (D) To take advantage of a lack of competition - HSC - SSCE Business Studies - Question 9 - 2014 - Paper 1
Question 9
What is the main reason for a business using penetration pricing? (A) To maximise profit per unit (B) To gain short-term market share (C) To develop a reputation fo... show full transcript
Worked Solution & Example Answer:What is the main reason for a business using penetration pricing? (A) To maximise profit per unit (B) To gain short-term market share (C) To develop a reputation for quality (D) To take advantage of a lack of competition - HSC - SSCE Business Studies - Question 9 - 2014 - Paper 1
Step 1
To gain short-term market share
Answer
The primary aim of penetration pricing is to quickly attract customers and gain market share. By setting a lower price initially, businesses can encourage consumers to try their product or service over competitors. This strategy is particularly effective in markets with high competition, as it incentivizes customers to switch brands or try something new.