How does market condition affect the choice of pricing strategy?

The key elements to consider in choosing the right pricing strategy include understanding your costs, knowing your competitors' prices, understanding your customers' price expectations, considering the evolution of the market, and assessing the competitiveness of the market.

Penetration pricing can have both positive and negative effects on a brand's image. On the positive side, it can help a brand establish a market presence and attract price-sensitive customers. However, it can also create a perception of the brand being 'cheap' or 'low-quality', which can be difficult to change even when prices are increased later. It's important for brands to carefully consider these potential impacts before implementing a penetration pricing strategy.

The long-term effects of price skimming can include a higher initial return on investment, the creation of an image of quality and exclusivity, and the ability to control market entry. However, it can also lead to customer dissatisfaction and loss of market share if the price reductions are not managed effectively.