Explanation:

A penetration pricing strategy prioritizes market share over profits for a given time period. The goal is to generate demand, rapidly build a customer base, and maximize brand loyalty in a short time. 

Penetration pricing is when businesses introduce a low price for their new product or service. The initial price undercuts competitors, forcing them to match the offer or quickly apply other strategies. Competitors' customers may switch over to the cheaper offer, and new customers buy in too. After a period of growth, the business typically raises prices to increase profits and reflect the product’s rising value.

If it’s an innovative product, this theory works the same way. Price is removed as a barrier to get people to try the new product or service. The company sets a price that’s a bargain for its unique value, while still being cheaper than the familiar options. Competitors have less time to respond before the company amasses market share and becomes the new standard of choice. Penetration pricing is generally used when demand for a new product or service is projected to be high. The hope is that the sales volume will make up for the below-average cost.