Which of the following pricing strategies would a company use to attract a large number of buyers quickly and win a large market share?

Question

BlackTom AI · Accepted Answer

We start by listing all the options and understanding the core idea behind each pricing approach.
Option 1: Optional-product pricing. This involves pricing optional or accessory products along with the main item, such as accessories, services, or warranties. It is not primarily about attracting a large number of buyers quickly or gaining market share, but about increasing per-unit revenue from the sale of extras.
Option 2: Captive-product pricing. This strategy prices a core product low but charges premium prices for on-going consumables or accessories required to use the product, locking customers into a continuing purchase cycle. While it can be profitable, it’s not specifically designed to rapidly expand market share by attracting many buyers at once.
Option 3: Market-skimming pricing. This approach sets a high price initially to skim profits from the top of the market, targeting early adopters willing to pay more, then gradually lowers the price. This is the opposite of attracting a large number of buyers quickly; it concentrates on maximizing early margins rather than market penetration.
Option 4: Market-penetration pricing. This strategy deliberately sets a low price to attract a large number of buyers quickly and capture a large market share, often aiming for high sales volume and quick market dominance. It aligns directly with the goal described in the question.
Option 5: By-product pricing. This involves pricing secondary products to help offset the costs of the main product or to utilize excess production capacity. While it can improve overall profitability, it is not a strategy aimed at rapidly expanding market share.
In summary, the reasoning favors market-penetration pricing as the approach that targets rapid entry and large-scale adoption, whereas the other strategies serve different objectives such as maximizing per-unit margins, locking customers into ongoing purchases, or offsetting costs rather than pursuing swift market share growth.

Homework: Ch 09 Warm up

Which of the following pricing strategies would a company use to attract a large number of buyers quickly and win a large market share?

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