The Pros And Cons Of Penetration Pricing

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1. Why might penetration pricing potentially negatively impact brand image and product positioning in the long run? Given this risk, why would a marketing manager use penetration pricing? Identify a brand (other than the examples in the chapter) that you believe is engaged in penetration pricing.

Penetration pricing may negatively impact brand image and product positioning in the long run because it may give a brand a negative image of being cheap. The opposite effect of what was intended may occur and even though the product can be bought for less, consumers may think the quality is less because of that; along with that comes a decline in value proposition as well.

Companies do use penetration pricing because it allows for a strong barrier
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Metro PCS does this as well. Sprint offers the ability to switch over one's phone(s) from a phone contract with a different carrier to their service at cut-throat prices.

2. Pricing against competitors is common. Yet, the approach carries some significant problems.

- What are the advantages of competitor-based pricing?

It aids in warding off price competition that can hurt a company. No complex computations are needed with this sort of strategy either. With highly competitive industries, the burden of price-based marketing isn't as bad.

- What are the risks of using competitor-based pricing exclusive of other approaches?

A company would have to use strategies outside of price to lure consumers in such as aggressive advertising, better customer support, market saturation,
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Identify a brand (other than the examples in the chapter) that you believe presently resides in this quadrant. In your opinion, why has the brand undertaken this pricing strategy? Do you believe there are risks to the brand in remaining too long in that quadrant? Why or why not?

Keeping in tune with car brands, the Toyota brand offers high quality with an affordable price. With the work-commute times rising, consumers need a vehicle that can make the trip with great fuel economy and a reliable engine. Dating back to when Toyota launched its brand within the United States, it has created several successful models that have made their way into consumer homes. Take the Toyota Camry for example, for it is widely popular and noted for its reliability and fuel economy.

Toyota uses a marketing strategy that works for the brand and the consumer. Contrary to American brands which are always searching for the next best thing, Toyota uses the motto, "if it's not broken, don't fix it". This ties in-hand with their pricing strategy effectively because the brand isn't spending as much time from starting from stratch, but rather can focus on improving what the brand already

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