What does penetration pricing aim to achieve?

Penetration pricing is a strategy used primarily to achieve mass market appeal by setting a low initial price for a new product or service to attract a larger number of customers quickly. By offering products at lower prices, companies can enter a competitive market, gain market share, and attract customers who might be hesitant to purchase at higher price points.

This pricing strategy is particularly effective in markets where price sensitivity is high, and it can help establish a product in the minds of consumers as an accessible option. Once a substantial customer base is established, companies can then gradually increase prices or introduce new products at higher price points, leveraging the trust and loyalty built with customers.

The other options focus on aspects that are not aligned with the primary goal of penetration pricing. For instance, increasing perceived product value typically involves premium pricing strategies rather than low penetration pricing. Stabilizing market competition is a broader strategic goal that may not directly relate to the immediate objectives of setting a low price to gain market entry.