The intention of loss leader pricing and penetration pricing is the same – to expand the market share. When a product is launched, it is priced much below its competitors, and over time the price is increased. The penetration pricing strategy is exactly the opposite. It shows the price reduction of 9 different models of Samsung phones over 41 months since their launch. This line graph is a classic example of price skimming. Therefore, skimming is a commonly used pricing strategy. As soon as a product launches, competitors introduce products with similar features. Car brands and tech-related products are highly competitive sectors. Unlike prestige pricing, in skimming, the price is reduced a few months after its launch. In both strategies, products are launched with a high price tag. The price skimming strategy is similar to prestige pricing.

In one of our earlier articles, we explored prestige pricing, a strategy in which a premium price is set for a product to give an impression of high quality and desirability. If your business goal aims to achieve any of the following or a combination, then a penetration pricing strategy may work for you. Such products are sensitive to price variation and have high mass appeal and aspiration value. Penetration pricing suits products that are price-elastic. The ultimate goal of such brands is to develop long-term loyalty among customers. After capturing a sizeable market share, the price is then steadily increased.

By offering the lowest price in its category, the product intents to sell maximum volume. ‘Penetration Pricing’ is a short-term marketing strategy, that brands try in the initial phase to increase market share. Industry Examples of Penetration Pricing Strategy.

Price skimming and penetration examples