![]() ![]() Capturing Market Share: According to the Law of Demand theory, penetration pricing helps retailers capture more of a market share by securing more customers and making them think they’re getting more for less.Additionally, by providing rewards and discounts you can offset product prices without lessening their value, since it will inspire consumers to spend more, giving you more returns over time. Your business can capitalise on penetration pricing by offering loyalty programs with the first purchase of a product. Building Brand Loyalty: Attracting new customers and keeping current ones is all about building brand loyalty.With the current cost of living crisis and supply chain challenges, consumers are looking to make every penny count, while retailers will want to build and maintain their customer base.There are several advantages to penetration pricing including: What Are the Goals of Penetration Pricing? It entails charging a higher price at the very outset to maximise the profit potential, then slowly lowering the price to bring in added customers. ![]() Price skimming is best used when your business has already piqued the interest of current or potential customers for a particular product. As the increase in demand for the product rises, your business then raises the price accordingly. Although they’re both ways to introduce new products to maximise profits, penetration pricing is when a retailer sells products at lower prices to first build a customer base, resulting in lower profit margins but heavier sales volumes that balance out the lower pricing strategy. What’s the Difference Between Price Penetration & Price Skimming?īefore diving too deep into the details, it’s first important to understand the difference between price penetration and price skimming. That’s why omnichannel retail EPOS experts from Eurostop have compiled this in-depth price penetration guide for you here. Of course, it’s a bit more involved than that but the right strategy can generate huge returns for retailers. This helps stores get customers through the door quicker and can attract a lot of initial attention. In the simplest of terms, price penetration is when a retailer offers a new product at a lower price at first to grab the attention of consumers. ![]()
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