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Market Penetration Pricing

Market Penetration Pricing Helped a Foldable Devices Manufacturer Capture 12% of the Total Addressable Market (TAM)

Market penetration and pricing are two critical challenges for businesses across industries, especially for startups trying to make an impact in a specific region or industry. A market penetration pricing strategy aims to help businesses accelerate product and service acceptance by attracting customers with low initial prices. 

It can be seen as an effective strategy to grow a customer base and stand apart from other market competitors. If you’re looking to improve brand reach using a market penetration pricing strategy, contact our experts to learn how we can help you determine the right prices for your offerings.

What is Market Penetration Pricing?

Product pricing is a critical aspect in marketing strategy development and a key determinant of business performance. Price being a metric that industrial and commercial customers use to judge the value of an offering, it plays a crucial role in impacting brand selection among competing alternatives.

Brands often use a market penetration pricing strategy to determine and set lower prices for their new products and services, i.e., prices that are lower than the optimum price range of a product. Market penetration pricing also helps define a long-range market price to accelerate market acceptance or to increase the existing market share of a brand.

Different Types of Market Penetration Strategies

Market Penetration Pricing

Request a free proposal to learn how we can help you build effective market penetration pricing strategies to capture a fair share of the total addressable market.

About the Client

The client is a leading player in the smartphone industry. With manufacturing units spread globally, the client had a well-established market presence and was one of the most sought-after brands with a growing customer base.

The Business Challenge

Having made its mark in the smartphone industry, the client recently launched a new series of foldable devices. However, the acceptance of the new smartphone did not turn out as perceived by the client, due to which the client wanted to develop a market penetration pricing strategy to attract buyers.

The challenges faced by the company in selling its newly launched foldable devices had prompted them to devise different market penetration strategies aimed at increasing sales and maintaining market position. Therefore, the client wanted to conduct in-depth research using both primary and secondary data sources to analyze the mode of penetration being used for different diversified products sold in the market and strategies helping them attain their existing market position. Using these research insights, the client wanted to develop a market penetration pricing strategy to build a customer base for its new product.

Problem Statement

The need to understand the market penetration strategies employed by players in the smartphone industry will be crucial in creating the marketing strategies of products that the client wishes to launch to conquer markets in different industries. Therefore, identifying the different strategies that can help edge out and survive the competition was crucial for analyzing the market for the new product line.

Our Approach

Our experts conducted in-depth research to analyze the market dynamics, competitor’s offerings, and the client’s overall market penetration strategies. This research aimed to reveal the different modes of market penetration pricing strategies that could benefit the client and accelerate acceptance of the new product.

Infiniti’s three-pronged research methodology aimed to examine how similar products and associated products managed to venture into new markets and conquer the existing markets. Therefore questionnaires and subsequent interviews were a part of the initial phase. Data aggregation, analysis, analysis, and presentation of the data in graphs, charts, and other appropriate forms were performed in the later stages. Data from secondary sources were also used to find conclusive evidence for the inferences to be made from the study.

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Business Outcome

The market penetration pricing strategy devised by our experts helped the client set a low price for their product during the introductory phase. By adopting such an approach, the client was successful in increasing market share and global sales volume. Their objective to reduce production cost was also achieved, resulting in a high ROI.

The market penetration pricing strategy also helped the client to:

  • Capture 12% of the total addressable market (TAM) in the smartphone industry
  • Improve market share
  • Fine-tune their strategy around market penetration pricing, market-entry, product innovation, and marketing

A market penetration pricing strategy is a low-risk strategy when compared to other market penetration strategies and is ideal for businesses and startups that are bootstrapped or unwilling to invest heavily in high-risk growth strategies. It exploits how to brands can drive market share and brand reach in an already thriving market where competing products exist.

Though positioning yourself in a well-established market is a safe bet, it requires robust implementation and execution of strategies around your product positioning, pricing, and marketing to compete and grow alongside existing companies. Infiniti Research can help you analyze markets and develop suitable market penetration pricing strategies to improve market share. Request more info from our experts to know more about our capabilities.

Penetration pricing strategy

Infiniti’s Penetration Pricing Strategy Helped a Consumer Electronics Company Achieve 22% Increase in Market Share

Penetration Pricing Strategy for a Consumer Electronics Company

With a large number of consumer electronics products being introduced every year, companies in the consumer electronics market are facing difficulties to increase market share and sales volume for their products. Also, as pricing largely impacts customers’ buying behaviour, it becomes vital for consumer electronics companies to competitively price their products. However, for companies that are new to the market, it is even vital to introduce some introductory offers to set up their customer base in a particular market. This is where penetration pricing comes in. Penetration pricing strategy helps businesses gain sales traction. This also helps businesses to increase market share.

Penetration pricing strategy helps businesses to lure customers away from established competitors. Request a FREE proposal to know how our product pricing strategies can help your business to achieve maximum market share within a short span of time.

Business Challenge

The client is a consumer electronics company in Europe. The client was new to the European market. As the European consumer electronics market was highly saturated, the client was facing difficulties in competitively pricing their products. The client even faced difficulties to lure customers’ attraction, build brand loyalty, and generate demand for their products.Therefore, they approached Infiniti Research to leverage their expertise in formulating a penetration pricing strategy. With Infiniti’s price penetration strategy, they also wanted to analyze the pricing strategies adopted by competitors and devise an appropriate penetration pricing strategy to gain market share and attract customers.

By leveraging Infiniti’s penetration pricing strategy, the client wanted to achieve the following:

  • As pricing plays a major role in customers’ buying behavior, the client wanted to leverage penetration pricing strategy to build customer base quickly by selling products at a lower price. By building a better customer base, the client wanted to enhance their sales rate.
  • As the client was new to the European consumer electronics market, they were facing challenges in capturing market share. With Infiniti’s penetration pricing strategy, the client was looking to provide introductory discounts to customers and capture maximum market share.
  • With Infiniti’s penetration pricing strategy, they also wanted to eliminate the market competition by offering products at a lower value compared to their competitors.
  • With Infiniti’s penetration pricing strategy, the client also wanted to create a mass market for their products and establish themselves as market leaders.
  • With Infiniti’s penetration pricing strategy, they further wanted to measure customers’ sensitivity to price changes and identify the price gap with their competitors.

CONTACT US to know how our penetration pricing strategy can help your business to formulate an efficient pricing strategy for your business.

Solutions Offered and Value Obtained

The experts at Infiniti Research followed a four-phased approach to formulate an efficient penetration pricing strategy for the client.

Conducted a thorough market pricing analysis – The experts at Infiniti Research also analyzed the European consumer electronics market players and their pricing strategies. The factors such as competitors’ product offerings, pricing strategies, market position, strengths, and weaknesses were considered during the analysis.

Analyzed the target audiences – The experts analyzed the needs and demands of the client’s target customers. The experts also analyzed customers’ buying behavior, customers sensitivity to price changes in the market. They also analyzed how consumers’ reacted to new product launches in the market.

Analyzed competitive landscape – The experts analyzed the top five competitors of the client. They further analyzed the structure of their pricing, discounts, and their market share.

Created a pricing strategy and execution plan – Based on the insights obtained, the experts at Infiniti Research formulated a pricing strategy for the client. The formulated pricing strategy plan acted as a blueprint that helped the client to efficiently price their products to gain maximum market share.

Results Obtained

With Infiniti’s penetration pricing strategy, the client was able to create a mass market for their products in Europe. They were also able to build a better customer base and achieve a high market share. By offering products at a lower price compared with their competitors, the client was able to surpass the competition. Infiniti’s penetration pricing strategy helped the client to enhance brand loyalty. Furthermore, it helped them to sucessfully establish their market presence in the European consumer electronics market.

Also, by leveraging Infiniti’s penetration pricing strategy, the client was able to:

  • Grow their market share by 22% in the course of one year
  • Capture customer traction by offering products at lower prices
  • Build customer and brand loyalty

For a new venture, figuring out how to price your products or services is highly challenging. Infiniti’s penetration pricing strategy can help you efficiently tackle this challenge. Request for more information to gain more insights into our services and learn how our penetration pricing strategy can help you achieve high market penetration rates quickly.

What is penetration pricing strategy?

Penetration pricing strategy is a business process in which the prices of products are initially kept low to reach a wide fraction of the market. This also helps businesses attract customers towards their brands and also outpace the market competition. Furthermore, penetration pricing strategy stimulates market growth and helps companies capture maximum market share for their products or services.

Advantages of penetration pricing strategy

  • Helps businesses to capture maximum market share in a short time
  • Enhances brand loyalty and also brand awareness
  • Helps companies gain a leading edge in the new or existing market compared with competitors
  • Helps achieve higher market penetration rates quickly
  • Encourages word of mouth marketing and also enhances customer experience

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Global Manufacturing Company Identifies Demand Drivers Through Premium Pricing Study

Infiniti’s latest premium pricing study provides insights on measuring the price and value addition of products and services that helped a global manufacturing company to enhance its approach to product pricing.

What is premium pricing?

A competitive market landscape drives businesses to focus on their product pricing strategies. These strategies have a long term effect on the brands’ positioning and consumer perception of its products and services. Price fluctuations have two adverse effects on the brand, it negatively impacts the return on investment (ROI) and hampers the brand’s ability to select the ideal target market. Organizations can benefit from a premium pricing strategy to create product differentiation and unique value proposition. It also helps the business gain a competitive edge and stay ahead of the other players in the market. Premium pricing is commonly referred to as “prestige pricing, ” and it often gives the product or service an aspirational image, improves brand perceptions, and drives return on investment (ROI). Infiniti’s recent study on premium pricing provides actionable insights to clients to help them assess their current pricing strategies and make informed decisions for the future.

Organizations often adopt a premium pricing strategy without assessing its market position, competitive environment, and the customers’ ability and willingness to pay the price. It is a major drawback for the businesses who command a premium price without a thorough market and customer insight, often results in an inappropriate pricing strategy and ultimately leads to brand and product failure.

Leveraging pricing analytics

Pricing analytics tool helps in evaluating past performance and help devise future strategies based on product categories and geographical segmentation. The business intelligence and analytics tools help organizations to set, track and measure attainable goals and objectives, and compare the actual and expected outcome. Pricing strategies can be devised based on the forecasts and insights provided by predictive analytics or a price optimization system.

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Expanding to niche markets

Several pricing strategies allow organizations to enter new market segments by offering products and services at a higher price compared to the other players in the market. A common consumer perception about product pricing is that higher the price, better the quality of the offering. Gradually, it helps businesses create brand awareness, drive revenue opportunities, create product differentiation, and build brand credibility in a highly competitive market.

Solutions and recommendations

The team at Infiniti Research offered various solutions and insights on pricing and value-added assessment of its catalog and helped a leading manufacturing company to formulate better pricing decisions. Some of the solutions offered include:

  • Identify the demands, preferences, and pain points of the current and potential customers
  • Evaluate the key factors that drive demand based on quality, price, service, and brand equity
  • Understand the competitive landscape and define benchmarks regarding quality, market players, and customer support
  • Determining the factors that help promote the value added solutions
  • Analyzing and identifying product portfolio and direct efforts towards various product categories like refueling, dry break, DLA standard products, and TTE

Read our comprehensive case study on how our premium pricing study helps a global manufacturing company.

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