State any four advantages of penetration pricing method to the firm.

Question

Accepted Answer

Four advantages of **penetration pricing** to the firm are:

1. It can result in fast diffusion and adoption, achieving high market rates quickly and taking competitors by surprise.
2. It creates goodwill among the early adopters segment, generating more trade through word of mouth.
3. It creates cost control and cost reduction pressures from the start, leading to greater efficiency.
4. It discourages the entry of competitors, as low prices act as a barrier to entry.