Implementing a price-penetration strategy for brands

Request a demo


Profile picture for user Angela de la Vieja

Angela de la Vieja

A price-penetration strategy mainly consists of initially setting a low price in order to achieve fast market penetration, that is, to efficiently capture a higher number of clients faster and therefore achieve a greater market share within a shorter timeframe.  The high volume of sales lowers production costs, making it possible for the company to further lower product prices and gain greater interest from users.

Implementation of a price-penetration strategy is linked to the price elasticity of demand.  If this is very elastic, the price-penetration strategy results in an automatic increase within itself.

Objectives when executing a price-penetration marketing strategy

  • Encourage users to buy larger quantities of the product.
  • Attracting a greater number of clients. This type of strategy can attract clients from the competition by applying discounts, offers, etc. that manage to capture their attention.
  • Motivate potential customers who are more price sensitive.
  • Achieve greater participation in the target market.

Price-penetration strategies capture customers with a new product that has a high perceived discount.  Sometimes though it can cause losses for the company, however, as the objective is to achieve brand loyalty which, in turn, will lead to an increase in price and sales in the future, the initial effort will eventually be compensated.

How to implement a successful strategy

  • Increase in promotion activity: Normally these types of actions are countered by competitors, they will generally carry out a similar strategy so as not get left behind.
  • A price drop: In order to make this strategy effective, prices must be lowered in order to attract the maximum number of customers and thereby increase the unit sales of the brand, making selling prices much more attractive than those of the competition.
  • Increase the number of distribution channels: By increasing the number of distribution channels the client then has more options regarding where to acquire our products and, consequently, a greater possibility that this will be the case.
  • Product improvements: It is a very important point to increase the perceived benefit of a product.  For example, launching an improved format of our products on the market helps attract new customers.
  • Carry out the use of BOGOF (Buy one, get one free): This practice refers to buying a certain product and taking another free with your purchase, this encourages consumers to spend more money than they had initially planned.  The brand loses profit margins, but with the added hope of creating a greater interest in the product and along with that, an increase in future sales which in turn manages to balance things out.

Related Articles


Consumer behavior: How can behavior tracking be effective for setting the right pricing strategies?

Behavior tracking is becoming massively popular today. As a result, pricing strategies born from studying consumer behavior are a merchant's dream come true. If done right, it can conquer every market for the business quickly. With abundant data available, the strategic makeover of the pricing models is becoming easy for companies. 

What is behavioral tracking, and how is the data beneficial in pricing?

For a quick understanding, behavioral tracking refers to gaining in-depth knowledge and insights into consumers through their web data. Their browsing habits, spontaneous decisions, shopping interests, and preferences come under behavioral tracking. 

How can enterprises use customer behavior data?

Companies can use customer behavior data as a tool to strengthen their hold on the market. A customer’s preferences, values, and tendencies allow businesses to work in sync with them through the collected data. Apart from this, customer behavior can also aid in:

Tailoring customer needs for customer retention

Personalization is becoming the heart of a company’s growth. No matter in which area an enterprise is functioning, tailoring the services, products, and solutions is becoming increasingly crucial. Uniqueness and personalization attract the crowd like no other. 

Increasing the overall value

One of the best ways customer behavior data affects a business is by upgrading the value of customers for the business. The customer’s characteristics allow the company to target the people that match the business prospects well. 

Optimizing every type of content

Everything that is up for digital display requires content. You must have seen companies unveiling their products or services through advertisements and making the initial public appearance. Two essential sales strategies – upselling and cross-selling comes through content optimization.

Pricing Strategy

Last but certainly not least is the influence of customer behavior data on the pricing strategy. The pricing strategy essentially constitutes content derived from data analysis. Companies need to have a dynamic approach to the pricing system to attract the right customers. 


Saint Valentine’s Day, always a good opportunity

V-Day is looming, a long-awaited date for all and also a good occasion for the eCommerce. According the study conducted by Prosper Insights and Analytics, it is forecasted the average consumer expense that day will be the highest in last years. Furthermore, 25% of them will buy online, which means an increase of 4% regarding 2014 (The US department of Commerce). This is, therefore, a key date where market competitiveness increase and which could be assumed as a big opportunity for our business or, a big fail if we do not adopt the correct strategies.

How to turn this event into an opportunity? To achieve this goal, we need to adapt our prices to this hostile environment, i.e. we need to develop an appropriate Dynamic Pricing strategy that allows us to adapt our prices to the variations produced in supply and demand and to position us ahead of our competitors. In V-Day, the frequency in changes will be higher, carrying it out each hour or even each minute. It is estimated that 65% of leader retailers have the ability to respond quickly at these variations, such Amazon. For this reason, it acquires great importance the correct use of a software specialised in price motorisation of competitors. Do not miss the time and adapt your business to new adversities.


Which are the best footwear marketplaces to sell on?

Footwear marketplaces are booming. The last decade has seen the launch of new specialized marketplaces with millions of different users. Among them are Spartoo, Sarenza and Farfetch, portals with international reach. Their main value is that they unite hundreds of footwear brands, as well as offering clothes and accessories. Although each has its own characteristics, they are all vertical marketplaces, i.e., they focus on a specific area, and their sales categories are interrelated. For sellers, these portals provide an opportunity to expand sales channels and drive the globalization of their e-commerce business. We explain how to sell on these footwear marketplaces so that you can assess whether they align with your plans for the future and then start defining a possible pricing strategy.