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Favor of a penetration pricing policy

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Reference no: EM132318014

Doors Inc. is a technology company that focuses on creating operating systems, which are the software packages that run everything on a computer. The company is releasing the newest version of its operating system and is deciding on the appropriate pricing strategy. The CEO favors an aggressive market penetration strategy in order to gain market share, even if it means pricing the operating system at a level at which the company would lose money on every sale.

Several senior managers are strongly in favor of a penetration pricing policy. Which of the following, if true, strengthens their argument?

  • Research reveals that the market is not price sensitive.
  • There are significant economies of scale in production.
  • Prices could be raised once the introductory period is over.
  • The demand for operating systems is inelastic.
  • Most customers are extremely unsatisfied with most technology companies.

Reference no: EM132318014

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