Promotional pricing brings about additional sales opportunity by attracting more and more customers. Detailed thought and planning is essentially required for starting a new business or launching any new product or service. Deciding the right way to price your product is a very critical [part of this planning. Not only the profit margins of your business, but also the growth of your business depends on the pricing strategy you choose for your business.
Point of Purchase. There are various kinds of strategies available and selecting the best amongst them hugely depends upon your overall long-term business strategy.
This pricing strategy focuses on the competitors’ pricing policies and strives to meet or beat those prices. This strategy is also known as a rock-bottom pricing strategy or a low price leader strategy. It aims at beating your biggest competitors based on pricing alone. According to Web Marketing Today, this strategy is used by many large retailers on the Internet. monitoring competitors price.
Since, on the internet the same products are available from multiple sources, consumers select the retailer with the lowest price offer. This pricing strategy is not suitable for small businesses, as it provides very narrow profit margins that make it challenging for the business to achieve enough momentum to grow.
This strategy is the most suitable tool for loyalty-building or making market-entry. This strategy involves offering a high-quality product at a much lower than expected price. This attractive combo helps a new business enter the market even when some strong competitor exist and the best part is that it builds loyalty with new customers from the beginning.
The customers “hooked” with the outstanding first product offering become more willing to buy additional products from the company and thus become faithful lifetime buyers.
The goal of this promotional pricing strategy is to get new customers even if you do not make a profit from the initial sale. After making a loss on the first sale, businesses can offer related products or up sells at normal prices. Even if you don’t make profit on the promotional product, enough profits are normally made from the additional regular-priced products and services to sustain the strategy for the long term.
UpstreamCommerce youtube page. Grocery store sales make use of this pricing strategy on a regular basis. They give discount on one or two popular items at a loss to attract customers who would then buy other articles. Once inside the store, the customer would buy more than just those products that are on sale.
This strategy targets the customers who believe high quality comes at a premium price. Businesses using this pricing strategy attempt to price their products and services at the highest in the market. Though this strategy limits the customer base available, but it provides much higher profit margins for each sale.