Whether you have a new retail business or you’ve been established for a while, there are always new tactics and strategies you need to investigate. They should be clear and powerful differentiators to help your company stand out from the competitors. And we’re here to assist you with that goal. Read on the get a better understanding of penetration pricing and how to put it in play.
What Is Penetration Pricing?
Penetration pricing is a marketing strategy used by businesses to attract customers to a new product. It sounds simple enough, right? However, there is an art form to the process. The business needs to offer lower prices during the initial offering.
Those are the sales customers will see immediately and have the urge to jump on the sale before missing the deal. Using phrases like “limited time only” will really gain their attention. The lower prices will help the new product penetrate the market and attract the customers away from your competitors.
With penetration pricing, the overall goal is to generate new demand, increase brand loyalty, and ultimately build a new customer base. Once you’ve gained that attention, you’ll want to ensure you don’t lose it. Make sure the product lives up to the hype.
Benefits of Penetration Pricing
You may think the lower prices do a disservice to your business, but it doesn’t. You have more to gain than lose with penetration pricing. There is no real loss in profit with this strategy because of all the new business it brings in.
Once new customers get the word about the low prices, they will spread the word. Word-of-mouth advertisement still works wonders in the retail market. Old and new customers will want their chance to take advantage of the new product because of all the great things they’ve heard.
The increase in sales value can lead to a decrease in production costs. Not only will you make more money, but you’ll save some too.
Putting It in Play
It’s crucial to remember this strategy and technique only work when applied correctly. The strategy has the potential to increase both market share and sales volume. When you work to put the product into play, you want to ensure it’s innovative.
Introducing a new product at a lower rate means nothing if it doesn’t come off as unique and different. Plus, you need the product to be original, because you will need to increase the prices eventually. Every month or two, companies typically set new pricing, and you want to ensure your customers won’t turn to competitors for a better deal.
When you introduce the product in your store, consider using some of our shelf molding strips to surround and protect the pricing label. Here at Global Display Solutions, we’re all about helping businesses present products in the most efficient ways.
Now that you understand penetration pricing, you’re ready to put it into play—and we’ve got the tools to help. For more information, visit our website.