Every product marketing campaign is based on a pricing strategy which directly has an impact on the profit of the company. This pricing strategy should meet the objectives of the sales and enhance the reputation while meeting the target for profit. Discount pricing strategy is a short-term traffic and sales generating tactic as far as a business is concerned. However, it is not recommended to give discounts for a long term as it decreases brand loyalty.
The pricing strategy is prepared by the business concern after preparing a marketing analysis. Distribution of products, positioning in the market and decision to promote online affects the pricing strategy. This is usually calculated based on cost of the product competitions within the industry and the profit to be generated. The pricing strategy usually involves full pricing strategy competitive pricing strategy and a discount pricing strategy. While creating the pricing strategy it is essential to give importance to the pricing strategies followed by competitors.
Discount pricing strategy is followed by business organizations in selling low priced products in higher quantities. The discounting strategy usually helps in staying competitive in the market. it is a usual practice followed by larger retailers demanding a discounted price from suppliers. It is advisable to use the discounting strategy sparingly in order to maintain the profit level especially in the case of concentrating brand loyal customers.
Customer loyalty is increased in the case of discounting pricing strategy by rewarding large volume of customers and repeating customers along with employees within the organization. During the discount period, a considerable number of items will be sold which will increase the overall turnover of the company.