Which pricing strategy sets prices low to establish a reliable customer base and then raises prices later?

Which pricing strategy sets prices low to establish a reliable customer base and then raises prices later?

• A. Economy Pricing
• B. Bundle Pricing
• C. Market Penetration
• D. Price Skimming

Answer: (C)

Market penetration pricing is about starting with a low price to quickly attract a broad customer base and build market share, with the plan to raise prices later once demand and loyalty are established. This approach fits the idea of introducing customers to the product at a cheap rate and then increasing prices after the base is reliable. The other strategies don’t align with this pattern: price skimming begins with a high price to maximize early profits and then lowers it, not a low price upfront; economy pricing aims for the lowest sustainable price by cutting costs without a planned later price increase; bundle pricing focuses on discounts for combined products rather than stepping up prices after gaining customers.

Market penetration pricing is about starting with a low price to quickly attract a broad customer base and build market share, with the plan to raise prices later once demand and loyalty are established. This approach fits the idea of introducing customers to the product at a cheap rate and then increasing prices after the base is reliable. The other strategies don’t align with this pattern: price skimming begins with a high price to maximize early profits and then lowers it, not a low price upfront; economy pricing aims for the lowest sustainable price by cutting costs without a planned later price increase; bundle pricing focuses on discounts for combined products rather than stepping up prices after gaining customers.