Price Penetration - GCSE Business Definition

Price Penetration is a pricing strategy used by businesses to attract customers to a new product by setting a lower initial price compared to competitors. The goal is to quickly gain market share and establish a customer base, encouraging consumers to try the product at an appealing price. Once the product has gained customer loyalty, the business may gradually increase the price. This is particularly effective in highly competitive markets, as it helps the business stand out and entices customers away from rival products. For GCSE Business students, understanding price penetration is crucial, as it demonstrates how businesses use pricing as a strategic tool to break into and succeed in a competitive market.