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.
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.
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.
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
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