Which pricing strategy is often used to attract attention in the early stages of a product's launch?

Penetration pricing is a strategy used primarily during the early stages of a product's launch to attract attention and quickly gain market share. By setting the initial price significantly lower than competitors or expected market prices, companies aim to encourage trial and adoption among consumers who may be hesitant to purchase a new product at a higher price. This approach helps to build a customer base and establish brand loyalty.

The low pricing can entice customers to try the product, allowing the company to capture a significant market segment quickly. As more consumers adopt the product, the company can later consider raising prices once a solid customer foundation is established. This strategy is particularly effective in competitive markets where price sensitivity is high, as it creates a compelling reason for consumers to choose the new product over established alternatives.

In contrast, other pricing strategies like skimming involve starting with high prices and gradually lowering them, which may not be as effective for attracting immediate attention in the early launch phase. Value-based pricing focuses on setting prices based on perceived customer value rather than competitive factors or cost structures, while competitive pricing aligns more closely with market rates and may not stand out as decidedly in a crowded market.