Promotional Pricing?

Question

the disadvantages and advantages of promotional pricing?

Answer 1

Promotional pricing can be used to reduce the psychological barriers consumers have towards initially buying a product. Once familiar with the promoted product there is a good chance these customers will choose to become regular (habitual) customers.

Promotional pricing also helps identify the “early adaptor” market segment. These consumers provide key inputs to defining and weighting the true product features. (True as opposed to some expert’s opinion: actual customer sales is where the rubber meets the road)

Promotional pricing is used to expand your market, or to penetrate into an existing market.

Promotional prices are a great way to resolve excess or perishable inventory.

One big disadvantage is that generally promotional prices are set below actual cost. So in effect you’re are loosing money on every sale.