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Market penetration pricing strategy, when a company agrees to come into the market with a lower price compared to the price of a similar product is being offered on the market. To execute this strategy the company will lower its prices so it can attract as many customers as possible, but this will cause the company to reduce its profit.

For example, if ABC mobile company is introducing a new model car, CBA car institute will offer the same car with the same feature at lower price to bring in more customers, Which will allow ABC mobile company to lower their pricing of their new model to bring in more customers, if the new model car was 30,000, the company will start offering a its newly launched car at 26,000, which will result in in a reduced profit margin.

Challenges that ABC mobile company will face the fact that this strategy is to determine the exact amount of price to be charged to a customer. Challenges can also be not attracting enough people to the new products which will result in the company losing out on income.

Market skimming pricing strategy is when a producer will set a high price at first when products is launched to attract customers that really likes the product then the producer will gradually lower the price to bring attraction to the product to attract the next layers of the market.

An example is Sony is introducing a new computer to the market that attract customers that really want the product and have resources to afford the product, then they lower the price of the computer to stay competitive in the market. Just like when the PS5 came out everybody was at stores or already preorder because they really wanted the products then after a couple of months the price of PS5 dropped to stay competitive in the market.

Challenges that the company can face with using skimming strategy is customers losing confidence in a product because they assume that prices are being lowered because something is wrong with the product. Especially if they do not know the company intent of lowering prices of the product, they assume that it can be something technical.