Final answer:
Option (C), Penetration pricing is a strategy aimed at quickly gaining market share by setting lower prices than competitors, and it is most effective as a mass-market strategy.
Step-by-step explanation:
Penetration pricing is a strategy used by companies when entering a market with the goal of attracting customers and establishing a significant market share quickly. This involves setting the price of a product or service lower than the competitors' prices to lure customers from those competitors or to prevent them from purchasing competitors' products in the first place. Once a substantial market share is achieved, firms may then increase prices. The purpose of penetration pricing is not to create barriers to entry or deter competition like predatory pricing, which is illegal and involves setting prices so low that other firms cannot compete, and ultimately leads to higher prices once competition is eliminated.
Given the provided options, the correct answer is that penetration pricing is a mass-market strategy rather than a niche strategy (C). It is not intended as a defense against competitors entering the market but as an aggressive pricing strategy to quickly gain a large market share. Penetration pricing is generally not used in markets with high product differentiation or as a premium pricing strategy variation, and it is especially not effective when there are no competitors or when customers are quality-sensitive rather than price-sensitive.