Penetration Pricing Examples
- Netflix penetrated the DVD rental industry by being more convienient and cheaper
- Southwest penetrated the airline industry due to their low fares
- Android devices penetrated the cell phone market with high quality and low cost phones
Penetration pricing is driven by the simple desire to save money. By entering the market with a lower price than competitors, a business with a penetration pricing strategy stands a better chance of attracting first-time customers. The strategy also creates barriers of entry into the market for other new businesses who may not be able to compete with the low prices set forth.
Penetration pricing has been used successfully in a many industries. The main aspect that makes penetration pricing successful is the ability to sell at a lower price while mainting the same value (for the most part) as competitors.