Which pricing strategy involves starting with a low price to build customer loyalty?

The pricing strategy that involves starting with a low price to build customer loyalty is penetration pricing. This approach is designed to attract as many customers as possible by offering products or services at a lower initial price. The aim is to gain market share quickly and establish a customer base.

Once a solid customer base is built, businesses may gradually increase their prices. This strategy is particularly effective in a competitive market where consumers are sensitive to price. By offering lower prices initially, companies can encourage trial and repeat purchases, fostering customer loyalty over time.

Using penetration pricing allows firms to differentiate themselves from competitors that may have higher prices, creating an incentive for customers to choose their product. As a result, this strategy not only helps to build loyalty but also contributes to a stronger market position as the customer base grows.