The Disadvantages of an Everyday Low Pricing Strategy

An everyday low-price offering reduces your profit margin and forces you to operate on a low budget. If you cannot afford to hire the number of sales associates ... CultureMusicSportsFood&DrinkEntertainmentLifeHomesNewsWeatherShoppingJobsCarsTheDisadvantagesofanEverydayLowPricingStrategySmallBusiness|BusinessPlanning&Strategy|PricingStrategyByGeorgeN.RootIIIWhatIsaMarketingMisconception?DisadvantageofPenetrationPricingStrategyWhyIsExclusivityValuableinRetail?FactorsContributingtotheSuccessofaBusinessPricingStrategiesforWomen'sBoutiquesProductpricingisanimportantelementofamarketingstrategy.Theconceptof“everydaylowpricing”meansthatyourcompanyconsistentlytriestobetheproviderwiththelowestpriceinthemarketplaceforagoodorservice,basedonsurveysofcompetitors’pricing.Havingthelowestpricecanbeadvantageoustoyourmarketingeffort,butthestrategyalsohasseveraldisadvantages.CredibilityIntheyearspriortotheprevalentuseoftheInternetine-commerce,beingtheeverydaylow-priceleadermeantbeingthepriceleaderinyourgeographicregion.TheInternetnowoffersconsumerstheabilitytocheckyourpricingagainsthundredsorthousandsofonlineretailers.YourcompanystandstolosecredibilityamongconsumersifyoureverydaylowpricesarenotcomparabletopricingfoundontheInternet,accordingtotheKnowledge@Emorywebsite.DiscountsThepromiseofeverydaylowpricingcanworkagainstyouwhenitcomestodiscountsandpricingspecials.Becauseyourcompanystrivestoprovidethelowestpricesatalltimes,youmaynothavesufficientprofitmargintoofferoccasionalpromotionaldiscounts.Pricingdiscountsaremarketingvehiclesthatcanbeusedtoimprovesales,accordingtowebsiteNetMBA.Whenyouhaveconditionedcustomerstoexpecteverydaylowpricesfromyourcompany,offeringpricediscountscanseemcontradictory;itmaycausecustomerstoquestionwhetherornotyouactuallyhavethelowestprice.PerceptionofQualityCompetition-basedpricingisamodelthatreliesonthepricinghabitsofyourcompetition.Itdoesnottakeintoaccountproductcost,yourprofitmarginorproductdemand.Insomecases,youmaybeforcedtosellproductatalosstoremaincompetitive.Alwaysbeingthelowest-pricedsuppliersometimescreatestheperceptionthatyourproductqualityislowerthanthatofthecompetition,accordingtoKarlHeil,writingontheReferenceforBusinesswebsite.Someconsumersmightassumethatcounterfeitorreconditionedproductsarethemeansbywhichyoumaintainyourlowprices.CustomerServiceAneverydaylow-priceofferingreducesyourprofitmarginandforcesyoutooperateonalowbudget.Ifyoucannotaffordtohirethenumberofsalesassociatesneededtomaintainahighlevelofcustomerservice,theneverydaylowpricingmaynotbeenoughtomaintainrepeatbusiness.ReferencesReferenceforBusiness;PricingPolicyandStrategy;KarlHeilNetMBA:PricingStrategyResourcesMarketWatch;Wal-Mart's"New"Strategy:EverydayLowPrices;AndriaCheng;September2010WriterBioGeorgeN.RootIIIbeganwritingprofessionallyin1985.Hispublishingcreditsincludeaweeklycolumninthe"LockportUnionSunandJournal"alongwiththe"Spectrum,"the"NiagaraFallsGazette,""TonawandaNews,""WatertownDailyNews"andthe"BuffaloNews."RoothasaBachelorofArtsinEnglishfromtheStateUniversityofNewYork,Buffalo.RelatedArticlesCupofCoffeePricingStrategiesDisadvantagesofUsingDynamicPricingTechnologicalFactorsThatImpactPricingStrategiesWhatAretheEffectsofManagement'sPricingandNon-PricingStrategyDecisions?Advantages&DisadvantagesofResalePriceMaintenanceHowDoesPricingVariablesAffectaBusiness?PricingStrategyMethodstoInfluenceCompetitiveBehaviorTheDisadvantagesofMarketPenetrationPoliciesValue-BasedPricingStrategyWhatIsaMarketingMisconception?DisadvantageofPenetrationPricingStrategyWhyIsExclusivityValuableinRetail?1CupofCoffeePricingStrategies2DisadvantagesofUsingDynamicPricing3TechnologicalFactorsThatImpactPricingStrategies4WhatAretheEffectsofManagement'sPricingandNon-PricingStrategyDecisions?