Companies employ various methods and strategies to compete with each other, among which is placing offers and discounts on their products and services. Such techniques may bring both advantages and disadvantages to their reputation. Admittedly, discounts and offers may promote sales. Many a time people are encouraged to purchase commodities in bulk which are not what they need because of lucrative price offers. Such unnecessary expenditures of consumer’s boost producer’s sales revenue and reduce their old stocks in special season. This leaves store room for new arrivals which can be sold for better prices to generate additional income. Nevertheless, sometimes these strategies invite price war causing income loss in the long run. Once price discounts are offered by one company, the competitors may also reduce their price on similar goods to attract consumers onto their sides. These business strategies in some cases give birth to price war, which undermine the profitability for the whole industry. For example, back in 1992 in China, the air conditioning producers Haisen cut price by 5% when they made his debut. In response to this, his competitors lowered market price by 6% and more. Unfortunately, all air conditioner producers didn't make a profit because of employing price offer and discounts unwisely. Hence, the downside of such marketing strategy must be considered. In a nutshell, although offers and discounts increase the sales of the products, companies also need to maneuver wittily in order to avoid price war, which brings no good to companies.
Companies
employ various methods and
strategies
to compete with each other, among which is placing
offers
and
discounts
on their products and services. Such techniques may bring both advantages and disadvantages to their reputation.
Admittedly
,
discounts
and
offers
may promote sales.
Many
a time
people
are encouraged
to
purchase
commodities in bulk which are not what they need
because
of lucrative
price
offers
. Such unnecessary expenditures of consumer’s boost producer’s sales revenue and
reduce
their
old
stocks in special season. This
leaves
store room for new arrivals which can
be sold
for better
prices
to generate additional income.
Nevertheless
,
sometimes
these
strategies
invite
price
war causing income loss in the long run. Once
price
discounts
are offered
by one
company
, the competitors may
also
reduce
their
price
on similar
goods
to attract consumers onto their sides. These business
strategies
in
some
cases give birth to
price
war, which undermine the profitability for the whole industry.
For example
, back in 1992 in China, the air conditioning producers
Haisen
cut
price
by 5% when they made his debut. In response to this, his competitors lowered market
price
by 6% and more. Unfortunately, all air conditioner producers didn't
make
a profit
because
of employing
price
offer
and
discounts
unwisely
.
Hence
, the downside of such marketing
strategy
must
be considered
. In a nutshell, although
offers
and
discounts
increase the sales of the products,
companies
also
need to maneuver
wittily
in order to avoid
price
war, which brings no
good
to
companies
.