The beauty of this strategy is that it works well with other pricing strategies. Combining market penetration pricing with other strategies Both Walmart and Netflix successfully implement this strategy after modifying it a little. The two companies’ business models, objectives, and requirements are different. The streaming company manages to maintain the majority of the customer base it has built with the help of its below-average price. That’s why Netflix raises the prices, even though it can draw away price-driven customers. In businesses like this, the product’s UX design and the quality of content are of equal importance to its price, perhaps more important.
The company gradually raised the monthly charge of the standard package to $12.99 in 2019.Īlthough we can’t accurately estimate the company’s profit, we know that it continuously invests in product development. Some of you will recall Netflix when it charged $7.99 for the standard plan in 2010. It purchases products at a much lower cost-per-unit and sells them at a below-average price. The company has a significant cost advantage. Walmart’s operations are bigger than most of its competitors’. However, unlike others, the company doesn’t increase prices over time and holds on to the ‘cheapest’ positioning in the market. Walmart, the American retail giant usually penetrates the market with a below-average price. It’s a great strategy to add to your marketing mix to grab a huge portion of the potential customer base early on or to capture customers from your rivals. Any size or type of business use this tactic when they’re highlighting a new product or service or wish to enter a new market. Penetration pricing is entering the market of a product with below-average prices. That’s why market penetration pricing strategy is a commonly used method of building hype around a product. Since 17% of consumers value price over personalized experience, corporate values, or convenience, the best strategy to boost sales is to offer the best price. One of the hardest things for any e-commerce owner is making people aware of your new products or services. Combining market penetration pricing with other strategies.
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