Promotional pricing

Examples of Promotional pricing in the following topics:

• Promotions

  • Promotional pricing means temporarily reducing the price of an established product in order to increase interest in customers.
  • Fundamentally, there are three basic objectives of promotion:
  • There are different ways to promote a product in different areas of media.
  • Promotional pricing means temporarily reducing the price of an established product in order to increase interest in customers.
  • Promotional pricing often involves reducing prices to unsustainably low levels.

• Bullwhip effect

  • The retail chain decides to promote Open Range Jeans and reduce the price to boost customer traffic in its stores, but the chain does not tell the Open Range manufacturer of this promotion plan.
  • Meanwhile, the retail chain has ended its Open Range promotion, and sales of the jeans plummet below normal levels because customers have stocked up to take advantage of the promotion prices.

• The Marketing Mix

  • The marketing mix is used to reach a target market and is often referred to as the "four Ps" of marketing: product, price, promotion, and place.
  • Price: Prices for such products may be a little higher than conventional alternatives.
  • The marketing mix is often crucial when determining a product or brand's offer, and is often associated with the four P's: price, product, promotion, and place.
  • There are various strategies that can be applied when pricing a product like skimming and penetration pricing.
  • Promotion comprises elements such as advertising, public relations, personal selling and sales promotion.

• Profit Optimization

  • Firms utilize strategies such as price and promotional reduction to minimize cost, maximize revenue, and thereby optimize profits.
  • Traditional profit optimization includes methods for reduction of pricing, promotional, and markdown losses.
  • They may also review information (including statistics) about events (known future events such as holidays, or unexpected past events such as terrorist attacks), competitive information (including prices), seasonal patterns, and other pertinent factors affecting sales.
  • The models use market segment and price point to forecast total demand for all products or services they provide.
  • " Optimization can help the firm adjust prices and allocate capacity among market segments to maximize expected revenues.

• Competition-Based Pricing

  • In economics, competition is the rivalry among sellers trying to achieve such goals as increasing profits, market share, and sales volume by varying the elements of the marketing mix: price, product, distribution, and promotion.
  • Competitive-based pricing, or market-oriented pricing, involves setting a price based upon analysis and research compiled from the target market .
  • For instance, if the competitors are pricing their products at a lower price, then it's up to them to either price their goods at a higher or lower price, all depending on what the company wants to achieve.
  • One advantage of competitive-based pricing is that it avoids price competition that can damage the company.
  • Status-quo pricing, also known as competition pricing, involves maintaining existing prices or basing prices on what other firms are charging.

• Demand-Based Pricing

  • Price skimming is a pricing strategy where initially a product price is set very high, but lowered over time.
  • Value based pricing (aka value optimized pricing) sets prices primarily on the perceived or estimated value to the customer (rather than on the cost of the product, the market price, competitors' prices, or historical prices).
  • These include: price skimming, price discrimination and yield management, price points, psychological pricing, bundle pricing, penetration pricing, price lining, value-based pricing, geo and premium pricing.
  • Psychological pricing is one cause of price points.
  • It can be used in any aspect of the marketing mix: the product, price, promotion, or place (geo targeting).

• The marketing model

  • For this reason, "benefits" is specified in the numerator of this equation (the higher the benefits, the higher the perceived value by the customer); on the other hand, "price" is placed in the denominator since the higher the price the lower the perceived value.
  • Price: What should be the appropriate price for this product that reflects not only its cost but also its benefits to compete with other products in the same segment or substitute products?

• Types of Advertising

  • There are many types of advertising; each has different attributes, such as price, viewing demographic, and medium.
  • There are many types of advertising; each has different attributes, such as price, viewing demographic, and medium.
  • The TV commercial is generally considered the most effective mass-market advertising format, as is reflected by the high prices TV networks charge for commercial airtime during popular TV events.
  • Sales promotions are another way to advertise.
  • The ultimate goal of sales promotions is to stimulate potential customers to take action.

• Forms of Financial Compensation

  • One such scheme, for example, may allow employees to buy shares of the company by calculating the mean share price over the last six months, and offering a discount of 10% or 15% on that price to employees.
  • One such scheme, for example, may allow employees to buy shares of the company by calculating the mean share price over the last six months, and offering a discount of 10% or 15% on that price to employees.
  • If the company's stock market price rises above the call price, the employee would exercise the option, pay the call price, and would be issued with ordinary shares in the company.
  • If the market price falls below the stock call price at the time the option needs to be exercised, the employee is not obligated to call on the option, in which case the option will lapse.
  • Alternatively, employee-type stock options can be offered to non-employees: suppliers, consultants, lawyers, and promoters for services rendered.

• The State of Competition

  • However, the existence of a very high market share does not always mean consumers are paying excessive prices since the threat of new entrants to the market can restrain a high market share firm's price increases.
  • Forms of abuse relating directly to pricing include price exploitation.
  • It is difficult to prove at what point a dominant firm's prices become "exploitative" and this category of abuse is rarely found.
  • On the one hand, it is believed that promotion of innovation through enforcement of intellectual property rights promotes competitiveness, while on the other the contrary may be the consequence.
  • In which case, the law must either give preference to intellectual property rights or towards promoting competitiveness.