According to McCormick (2016), “promotional pricing is one of the most powerful sales strategies there is. Promotional pricing is similar to bundling price, however, here the merchandise are put together so as to make the client use the bundled merchandise for the first time. The psychological pricing advantages and disadvantages recognize the brain’s desire to save money and feel satisfied emotionally. From Disabled and $500k in Debt to a Pro Blogger with 5 Million Monthly Visitors, 13 Promotional Pricing Strategy Advantages and Disadvantages, 13 Dynamic Pricing Advantages and Disadvantages, 15 Psychological Pricing Advantages and Disadvantages, 11 Dual Pricing Advantages and Disadvantages, 10 Price Leadership Advantages and Disadvantages, "From Disabled and $500k in Debt to a Pro Blogger with 5 Million Monthly Visitors. Advantages There are many ways in which promotional items can be helpful based on what item you choose, how you brand them and the methods you choose for distribution. Offering discount pricing is a great way to give your buyers an incentive to pay you early. Demand Creation for New Products. Customers do not like to be deceived with inflated price mark ups, they are knowable and that promotional price makes the buyer question the value of that specific item that when that item is not on sale any more, the buyer may not even consider it anymore. Let’s now say that there are three shirts of similar cut and style that the consumer is thinking about purchasing. Any information contained within this essay is intended for educational purposes only. In order to bring in more customers, numerous companies apply sales promotions and this can be a problem because once the promotions are over with, the customers are gone too. The low price of individual product leads to higher revenue in bulk as more quantities get sold. 1. Some examples of promotion types are: The table below depicts types of promotions in a more simple way. Companies continually test their promotion pricing in order to answer this key question. This type of strategy increases a consumer’s value perception. 3995 words (16 pages) Essay. Disclaimer: This is an example of a student written essay.Click here for sample essays written by our professional writers. Bringing new buyers is the main advantage of promotional pricing, additionally, it aids in growing the cash flow of the business and also assist to increase the demand of the merchandise; promotional pricing is a very effective strategy. This creates a race to the bottom where some businesses may be willing to take a loss just to generate a few revenues. Retrieved from, Gray, T. H.(2018). If this marketing strategy is always used, however, then the only customers who will stop by are the ones that will leave you as soon as a better deal comes along. The advantages of using promotional pricing. Low prices provide an attractive incentive for customers to buy, especially those who are budget conscious. This type of strategy increases a consumer’s value perception. Most consumers do not want to pay full price for an item unless they have no other choice. Advantages and disadvantages of sales promotion . The major focus should be in obtaining the correct price level during the price planning process where the sales and profits can be increase to the maximum, which will be up to your own marketing goals and objectives. *You can also browse our support articles here >, https://www.marketing91.com/types-of-pricing/, ttps://www.quora.com/What-are-the-advantages-and-disadvantages-of-p, https://smallbusiness.chron.com/disadvantages-marketing-promotional-strategies-. Disadvantage: Changes Customers' Price Perceptions. Just to mention some examples, credit card interest, the automobile servicing, e-book purchase vs. e-reader deices, replacement parts and blades for razors. Selectivity. Free resources to assist you with your university studies! However, on the other side a well thought out loyalty plan would both boost the company’s image and supply you with data on your customers purchasing behavior that may be useful for the company. This sets a dangerous precedent. List of the Advantages of a Promotional Pricing Strategy. When used sparingly as a way to liquidate old inventory or introduce consumers to your products or services, it can be effective. E-MAIL . Optional Product Pricing: Meaning, Advantages, and Disadvantages September 14, 2019 By Hitesh Bhasin Tagged With: Sales management articles Optional Product Pricing is a method to determine product costs where a business sets a low cost for its most basic product and then profits from selling more costly accessories. If you carry inventory with your business, then having it carry over to the next tax year could have a negative impact on your company tax responsibilities. Offer Details: Advantages Disadvantages Of Sales Promotion. To counter this issue, a limited return policy for items that may not be accurately described can limit a lot of the potential damage. Some customers have never returned to JCPenney after that quest to find a better pricing strategy was implemented. LOCATION . Except buyer are aware of a specific brand and its merchandise, it is very difficult for a company to function successfully. A good number of customers perceive that an item is cheaper than they could buy somewhere else by business placing a red sales tag on an item, which is certainly less than the original price they were asking for. Advantages and Disadvantages of Traditional Marketing ... as they don’t need any explanation about the promotional material. One thing to remember is that promotions are short term, therefore promotion pricing is intended to offer a temporary increase in the company’s sales by presenting more appealing terms than the regular list prices. If a company needs some fast cash to cover an immediate or short-term expense, then this strategy can get the job done. Promotional Pricing: Advantages and Disadvantages. Following are some of the advantages of using promotional pricing. Also, a great number of buyers who would like to buy high price products as electronics will wait for the holiday sales season. 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