Penetrating Pricing Policy: According to this pricing policy, in the initial stage low prices are set-up to make the particular brand popular. This strategy is mostly used when there is strong potential competition in market and while launching fast moving consumer goods where demand is highly elastic and to restrict the entry of new competitors in the market. But at the same time the demand goes so high that it becomes difficult for the producer to meet it or the consumers think that the low price product are low in quality. 

Pros: 

1. Penetrating pricing yields high sales turn over and thereby offers the benefits of economies of scale. 

2. A low initial price helps to restrict the entry of new competitors. 

3. The product finds immediate acceptance in the market as common man can afford it. 

4. Penetrating pricing can prolong the life of a product after the cream of the market has been skimmed. 

Cons: 

1. A low price may bring in so much demand which the producer may be unable to meet. 

2. Consumers may interpret low price as a sign of poor quality. 

3. It may be very difficult to increase the price when cost increases. 

4. Low price may not yield adequate profit margin to the producer and the dealers.