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Hi John, my kaplan text says that penetrating pricing is suitable when the company is trying to shorten the initial period of the product’s life cycle.but I thought it was the opposite(longer life cycle) because in order for the company to recover it cost, a shorter life cycle will not accomplish this since low prices are charged for the product.Thank you
Penetration pricing is certainly charging a low price. The intention is to gain market share and then always to increase the price.
I would guess that what Kaplan are trying to say is that if you do gain market share quickly (and then keep the market share when you put the price up), then potentially you can shorten the life-cycle.
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