Impact of Penetration Pricing Strategy on Customer Attraction

This report examines the penetration pricing strategy employed by Lidl, a German international discount supermarket chain. The study investigates the impact of this strategy on customer attraction, market share, and competitive advantage. The introduction provides an overview of penetration pricing, its advantages (increased customer interest, reduced competition, brand loyalty, and increased sales), and its rationale. The report outlines the research aim (to identify the impact of penetration pricing strategy in attracting customers), objectives (understanding penetration pricing, determining its significance, and examining its relationship with customer attraction), and research questions. The literature review identifies research gaps related to the effectiveness of penetration pricing in attracting customers. The research methodology outlines the use of positivism philosophy, a deductive approach, and a survey strategy with a questionnaire administered to 50 managers of Lidl. Data analysis will involve frequency distribution analysis. The report concludes with ethical considerations and provides a comprehensive framework for understanding penetration pricing's role in Lidl's success.

SELECTION OF PENETRATION OF
PRICING STRATEGY IN A
BUSINESS
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Chapter 1: Introduction
Overview of the title
Penetration pricing strategy refers to the marketing strategy applied by an organisation,
with aim of attracting larger base of customers towards new services or products offering a lower
price or cost during its initial offerings. This is essential for an organisation because it will help
an innovative service or products penetrate the market as well as attract customers away from
competitors. There are different advantages of using penetration pricing strategy for an
organisation. These are: increased customer interest, reduced competition, more brand loyalty,
increased sales and many more. All these are main advantages of penetration pricing strategy
that will be beneficial for an organisation in attainment of competitive advantages in successful
and within minimum time period. Along with this, penetration pricing strategy is a type of
pricing strategy which is applied to speedily gain market share through setting an originally low
price to induce customers to buy. Such kind of pricing strategy is mainly applied by new entrants
into a market. There is different rationale behind selection of penetration pricing i.e. capture
market share, develop brand loyalty, switch customers from competitors, drive competitors out
of market, create significant demand etc. There are different advantages of penetration pricing
for an organisation including high adoption and diffusion, marketplace dominance, economic of
scale, increased goodwill, high inventory turnover and many more. These are major advantages
of penetration pricing that will help a business organisation in attraction of maximum customers
within less time period.
Background of an organisation
Lidl is a chosen German international discount supermarket chain for this research.
Company was founded in 1973 by Josef Schwaez and headquartered in Neckarsulm, Baden-
Württemberg. Company served their products and services in also different nations such as
Europe, Hong Kong, United States. Lidl used penetration pricing strategy for attracting
maximum number of customer base towards their products and services. main purpose of Lidl is
to increase customer base that is only possible by using penetration pricing strategy.
Research aim
“To identify the impact of penetration pricing strategy in attracting customers towards
new product or services. A study on Lidl.”
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Research objectives
 To develop basic understanding regarding the penetration of pricing strategies in context
of an organisation.
 To determine the significance of penetration pricing strategy for company.
 To examine the relationship between penetration pricing strategy and customer attraction.
Research questions
 What is penetration of pricing strategy in an organisation?
 What is the significance of penetration pricing strategy for a company?
 What is the relationship between penetration pricing strategy and customer attraction?
Rationale of the research
Main rationale behind selecting this topic is to identifying the issues of lack of customer
base within an organisation. This is a main reason behind doing this investigation and for this
penetration pricing strategy will be used because it will support an organisation by incurring
customer base. High customer turnover is not good for the growth and success of an organisation
because it reduces brand value in marketplace.
Significance of the research
Current dissertation is important and significant for an individual, organisation and many
other stakeholders. For individual, this dissertation help researcher by enhancing their different
types of research skills such as literature review, time management, communication, data
collection and so on. With the help of all these skills, researcher can easily complete each
activity of dissertation in systematic and successful manner. For organisation and other
stakeholders, present investigation helps them by improving their knowledge about penetration
of pricing strategy along with its effectiveness in attraction of larger customer base.
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Chapter 2: Literature review
Literature review introduces to the process used for collecting secondary information from
articles, books, magazines and many other sources applicable to the topic. Main purpose of
literature review within dissertation is to recognise the research gap. In current dissertation main
gap of literature is the impact of penetration pricing strategy in attracting customers towards new
product or services. In previous studies, there were lots of information available regarding the
use of penetration pricing strategy in an organisation, but there were lack of information
regarding the effectiveness of penetration pricing strategy in attraction of larger number of
customers towards the brand. This is a main gap and for fulfilling this, research questions will be
used that will also help in attaining of each objective successfully. Research questions of the
current dissertation will be explained as below:
What is penetration of pricing strategy in an organisation?
According to the…
What is the significance of penetration pricing strategy for a company?
What is the relationship between penetration pricing strategy and customer attraction?
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Chapter 3: Research Methodology
Research methodology introduces the process of gathering and evaluating information about
the specific area of study. main aim of methodology with dissertation is to gather accurate data
about the topic. Primary and secondary methods of data collecting will be used within a research.
For collecting primary information, questionnaire will be applied because it helps in collecting of
quantitative and reliable data within minimum time. For secondary data, there are different
sources that will be applied for literature review. These are books, articles, journals, publication
research and many other relevant to the topic. 50 managers of Lidl will be selected for fulfilling
the questionnaire. These respondents will be selected randomly through probability sampling.
Frequency distribution analysis will be applied for analysing the primary and quantitative data
collected from questionnaire and for 50 managers. Along with this, there are different types of
methodologies that will be described as below:
Research philosophy: This is an effective methodology that basically has two types i.e.
positivism and interpretivisim. These are main philosophies but in accordance to the present
dissertation, positivism philosophy is useful. Interpretivisim is another philosophy that is not
useful within a dissertation because it takes maximum time and cost as well as not facilitate in
collection, analysation and usage of numerical information. Along with this, main reason behind
selection of positivism philosophy is it helps in getting of numerical and quantitative information
in minimum time.
Research approach: This refers to the significant process of evaluating gathered
information about the topic. There are two main approaches of analysing data i.e. inductive and
deductive approach. In this, inductive approach is useful for evaluating qualitative information,
while deductive approach is effective in analysing quantitative information. According to the
current dissertation, deductive approach is useful and valuable for investigator as it assists in
evaluating of numerical or quantitative information within minimum period of time and in
systematic manner, that turn to impact in accomplishment of all objectives.
Research strategy: There are different strategies of the investigation are known as case
study, survey, experiment, action research etc. These are main strategies but in accordance to the
present investigation, survey is a valuable and essential strategy. Main purpose behind selection
of survey is it help researcher to gather quantitative information from larger base of respondents
and within minimum time.
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Research choice: This is a process of collecting data from effective research choice. There
are two choices of research including qualitative and quantitative. These are main choices but
according to the current topic or dissertation, quantitative research choice is more valuable for
investigator. Main purpose regarding selection of quantitative type of research choice is it
facilitate in collection of numerical information without consuming additional time as well as
cost. Qualitative is another research choice that is not essential for doing present dissertation
because it takes maximum time and not helps in gathering numerical information.
Time horizon:
Data collection:
Sampling:
Research instruments:
Data analysis:
Research ethics:
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