Statement: In a highly competitive market, firms often use penetration pricing to attract customers quickly, with the intention of raising prices once they’ve established a loyal customer base.
Which of the following is the most appropriate answer?
1
The statement is correct and describes the purpose of penetration pricing accurately.
2
The statement is incorrect because penetration pricing always involves high prices from the start.
3
The statement is incorrect because penetration pricing is primarily used for new-to-market products only
4
The statement is correct, but it applies only to markets with minimal competition.
5
The statement is correct, but it applies only to premium products in niche markets.