I (Meaning and importance of Exports) Unit Structure

10.7.2 
 ADVANTAGES 
OF 
PENETRATION 
PRICING 
STRATEGY 
1. Quick Sales 
This strategy enables the exporter to capture the market by 
quick sales. This is because of low price, many consumers may be 
induced to buy the products. 
2. Brand Loyalty 
It is possible to develop a strong brand loyalty in the market. 
Low price coupled with good quality attract repeat purchases form 
customers. 
3. Economies of Large Scale 
The exporter can get the benefit of substantial economic of 
large scale production and distribution of goods. 
4. Less Competition 

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Competitors may not be tempted to enter into the market 
because of low profit margin. 
5. Brand Leadership 
This strategy helps the exporter in becoming a brand leader 
in the market because of lower competition and higher sales. 
6. Long Term Strategy 
Penetration strategy is useful in the long run as prices can 
be gradually increased considering the degree of competition. 
7. Suitability 
It is suitable to those product where there is a possibility of 
repeat purchases or where the seller is assured of large and long 
term market. 
8. No Blocking of Funds 
There may be no blocking of funds due to quick sales which 
will result in over all high income to the exporter. 
10.7.3 
 DISADVANTAGES OF PENETRATION PRICING 
STARTEGY 
1. Development expenses 
Penetration policy is not helpful in recovering the initial 
developmental expenditure such as that on advertising campaign. 
2. Consumers Doubts 
Consumers may doubt the quality of goods as prices are 
low, because lower prices are associated with the quality.