Promotional PricingKnowledge Center |
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What is Promotional Pricing?Promotional Pricing is a marketing approach to pricing that is often used to clear excess stocks, to generate high-volume sales during a limited period by selling to cost-sensitive customers, and to push sales during the launch of new product lines. It refers to an instance where pricing is the key element of the Marketing Mix. Price Adaptation StrategiesMany firms don't set one single price for a product; rather they rely on dynamic pricing strategies ("Price Adaptation Strategies"). While price discounts and allowances are used as a "push strategy" to facilitate the movement of goods through the distribution channel (excluding the customer), promotional pricing is used only to lure the customer via a "pull strategy". Some examples of price adaptation strategies are: Geographical Pricing, Discount Pricing and Allowances, Differentiated Pricing, and Promotional Pricing. Different Types of Promotional Pricing
Issues with Promotional Pricing. DisadvantagesIf the strategy works, competitors may copy them and the firm loses the competitive edge. If the strategy fails, the firm loses the money it invested, which could have otherwise been put into other marketing techniques such as advertising or product improvement through R&D.
Compare with: Discount Pricing | Perceived Value Pricing | Psychological Pricing | Competitive Pricing | Cost-plus Pricing | Standard Cost Pricing | Marginal Cost Pricing | Target Pricing | Penetration Pricing | Price Skimming |
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