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Cl pricing 20_price promotion_412

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Sohag Hasan
Sohag Hasan

The document discusses different forms of temporary price reductions used as price promotions, including loss leaders, cash rebates, coupons, and buy one get one offers. It notes the strengths can be to generate interest, accelerate demand, introduce new products, and maximize support, while shortcomings include potentially making buyers more price conscious and not being effective against new competitors. The document also lists questions to consider for price promotion decisions around timing, duration, target audience, unit quantities, price reductions, and profitability. It concludes some forms like off-season reductions can be profitable but promotions must be used carefully to avoid a price war.

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Cl pricing 20_price promotion_412
Forms of price promotion Temporary price reduction Issues of Price promotion decisions Strengths and shortcomings of price promotion
Loss leader Cash rebate Coupon Buy one take one Off-season price reductions Event pricing
Generate new interest in a old product; Accelerate demand; Introduce new product; Meet specific competitive situations; Adjust to fluctuation in supply and demand; Enhance advertising effectiveness; To increase perceived value Maximize distributors’ cooperation and support.
Should a price promotion be made? To whom should the deal be offered? When should the promotion be offered? How frequently a price promotion be run? How long the price promotion be run? How many units should be covered by the promotion? How much the price should be reduced? What will be effect of price promotions on buyers’ perception? How profitable will be the deal? How can the deal be justified?
Off-season price reductions are profitable Too frequent price promotion may make the buyers more price conscious Not effective in countering new competitive brands More effective for newly launched brands Not cures for generally sick product Competitor often react with similar offer, which in effect create cut throat competition Legal consequences may have to face
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Cl pricing 20_price promotion_412

  • 2. Forms of price promotion Temporary price reduction Issues of Price promotion decisions Strengths and shortcomings of price promotion
  • 3. Loss leader Cash rebate Coupon Buy one take one Off-season price reductions Event pricing
  • 4. Generate new interest in a old product; Accelerate demand; Introduce new product; Meet specific competitive situations; Adjust to fluctuation in supply and demand; Enhance advertising effectiveness; To increase perceived value Maximize distributors’ cooperation and support.
  • 5. Should a price promotion be made? To whom should the deal be offered? When should the promotion be offered? How frequently a price promotion be run? How long the price promotion be run? How many units should be covered by the promotion? How much the price should be reduced? What will be effect of price promotions on buyers’ perception? How profitable will be the deal? How can the deal be justified?
  • 6. Off-season price reductions are profitable Too frequent price promotion may make the buyers more price conscious Not effective in countering new competitive brands More effective for newly launched brands Not cures for generally sick product Competitor often react with similar offer, which in effect create cut throat competition Legal consequences may have to face