Promotional Pricing

Companies will provisionally price their products below list cost and sometimes even below cost. Promotional pricing takes different forms. Department and Supermarkets stores will price some products as loss leaders to attract customers to the store in expect that they will buy other items at usual mark-ups. Sellers will also use special-event pricing in sure seasons to draw more customers. Sometimes Producer will offer cash rebates to consumers who buy the product from dealers within a particular time; the manufacturer sends the rebate to the customer directly. Rebates have been famous with automakers and manufacture of durable well and small appliances, but they are also utilized with consumer-packaged goods. Some of manufacturers offer longer warranties, low-interest financing, or free maintenance to decrease the consumer's "price." This practice has newly become a favourite of the auto industry. Or, the seller can simply offer discounts from usual prices to increase sales and reduce inventories.

However Promotional pricing can have adverse effects. Used too often and copied by competitors, price promotions may create "deal-prone" customers who wait till brands go on sale before buying them. Or, continually reduced prices may erode a brand's value in the eyes of customers. Sometimes marketers use price promotions like a quick fix rather than sweating through the hard process of developing efficient longer-term strategies for building their brands. Actually, one observer notes down those price promotions may be downright addicting to the company and the customer both. The point is that promotional pricing may be an effective means of producing sales in sure circumstances but may be damaging if taken as a steady diet.