The penetration strategy is a part of the price strategy in marketing. It designates a price strategy, with which the price is kept at the beginning of as low as possible, in order to obtain a high market penetration, which one increases gradually however later. The enterprise expects to obtain by the market penetration a competition advantage. The counterpart to penetration strategy is the absorption strategy.

Conditions

A condition for a successful penetration strategy is the existence of a sufficiently large market. Within this market the offerer change costs should be very high, so that the change is unattractive with increase of the prices for the customer.

In addition the product must draw more or less regular payments. The enterprise, which would like to carry out a penetration strategy, must be financially very loadable, finally is at first very low the financial yield. Usually the penetration strategy is suitable only for those, which are already market leaders or monopolist in a closely neighbouring market. Because in this case often already exist Kundenbeziehungen, which by the new product to become only further "developed" to have.

See also

• Dumping
• Ruinous competition

Articles in category "Penetration strategy"

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Related Websites

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• Kurtz Marketing & Management. For Marketing Strategy | Market ...
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  Marketing revision notes on pricing strategies - penetration pricing.


• Marketing Terms Dictionary - American Marketing Association - www ...
  market penetration strategy. - A move by management to increase its market share held by current products in currently serviced markets. ...