What pricing strategy typically involves low initial entry prices to gain market share?

Penetration pricing is a strategy where a business sets a low initial price for a new product or service in order to attract customers and quickly gain market share. This approach is often used in highly competitive markets or when launching a product that is new to consumers. The low price can entice consumers who may be hesitant to try something unfamiliar, thereby increasing the product's visibility and encouraging trial.

Over time, once the business has established a solid customer base and increased its market share, it may gradually raise the prices. This strategy can be effective in building brand loyalty and can deter potential competitors from entering the market due to the established customer loyalty and lower price perception.

In contrast, the other pricing strategies mentioned involve different approaches. Competitive pricing focuses on setting prices based on competitors' pricing, while cost plus pricing involves adding a markup to the cost of producing the product. Skimming pricing, on the other hand, entails setting a high price initially and then gradually lowering it as the product moves through its lifecycle, aiming to maximize profits from early adopters before wider market entry.