Posted in Marketing and Strategy Terms, Total Reads: 9526
Definition: Promotional Pricing
It is one of the most powerful sales promotion techniques in which the prices are reduced drastically for a short duration. It is also termed as On Sale pricing. This helps to increase the demand for the product.
Price promotions or promotional pricing is the sales promotion technique which involves reducing the price of a product or services in short term to attract more customers & increase the sales volume.
This strategy is widely used both by manufacturers & retailers to gain market share & attract the customers to product, shop or a brand. Manufacturers use this technique to make customers aware of a particular product line or services or a particular brand. While for retailers, instead of a particular product or brand, the price discount is given on many products so as to get the consumer to buy a variety of things from the shop.
It is an informed decision by the company to give price discount on particular product or brand & calculations are done in order to assess the feasibility of discount & the time period for which it could be given. The rationale behind giving price discount is that any loss experienced would be compensated by the increase in sales volume and the addition of new loyal customers.
Some flaws are also associated with this technique as consumers stock up the product during promotional period & pre pone their purchase so as to get benefit of the price promotion. The price promotion may affect the brand equity as well & hence should be decided wisely.