What pricing strategy is aimed at quickly gaining market share by setting a low initial price?

The pricing strategy aimed at quickly gaining market share by setting a low initial price is called penetration pricing. This approach is typically employed by businesses when they want to attract customers to a new product or service and establish a solid foothold in the market. By offering a low introductory price, companies can entice consumers to try their product, potentially increasing sales volume and overall market share rapidly.

Once the product gains traction and customer loyalty, the company may consider raising prices, capitalizing on the initial interest and creating a barrier for competitors. This method is often contrasted with price skimming, which involves setting high initial prices and gradually lowering them over time as the market evolves. In the case of penetration pricing, the focus is on volume and early market capture rather than maximizing profit margins upfront. This makes it an effective strategy in competitive markets where differentiation is crucial for success.