Attract price-sensitive customers Penetration pricing isn't necessarily about having the lowest possible price. The monthly price was low enough to convince people to give Netflix’s unique business model a chance. However, the basic level will now be 11.99 and premium will be 22.99. Their penetration pricing approach helped them lure customers away from the dominant player in the video rental space. And if you need a new media player to access your favorite services with, check out our guide to the best streaming devices. The prices for Netflix with ads (6.99) and the standard plan (15.49) are staying the same. Just last month Netflix slashed prices in one huge market where it has relatively low penetration, India, lowering the price of the Basic plan from 6. Penetration pricing: With this pricing strategy, a business sets a low price on a new product or service in an attempt to gain significant market share quickly. Quick tip: If you're interested in other streaming options, check out our guides to the best music streaming services and the top services to watch free movies online. Penetration pricing is an acquisition strategy for companies that are trying to gain a foothold in highly competitive markets. The Standard plan allows you to download to two devices, and the Premium plan lets you download to six. An extreme form of penetration pricing is called predatory pricing. This pricing strategy is generally used by new entrants into a market. While the lowest tier, Standard with Ads, does not allow you to download movies and shows to your device for times when you don't have internet, the remaining plans let you download content. Penetration pricing is a pricing strategy that is used to quickly gain market share by setting an initially low price to entice customers to purchase. Netflix managed to convince customers that if they were willing to wait just one day to receive their movies, they could rent the movie for only a dollar. With $7.99 monthly charge for an extra memberĭue to licensing restrictions some titles are inaccessible Here are some of the most powerful strategies you can use to increase market penetration.
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