The downside to this strategy is that if the prices are too high, the products will not sell and the organization will not make any money for the charity. With penetration pricing, the organization will start off by making a small profit by selling their products for a low price to attract the attention of customers. As time goes on, these prices will increase, generating more profit for the charity. A disadvantage to this method is that at the beginning, the profit will not be a lot and may not cover the expenses needed to make the products. On the other hand, with competitive pricing the Red Cross will follow the price of competitor’s such as the Salvation Army of Canada and Free the Children. This will allow the organization to stay up to date in the market making the same amount of profit as their competitors. The bad side to this is that if the prices for products are relatively the same, people may go to more popular brand names and charities rather than the Red …show more content…
After analysis of the three different pricing strategies, the Red Cross will use penetration pricing as its main strategy as the company believes that this method will generate more profit over a long period of time whereas the other methods may fail in a short amount of time. As a result, the Red Cross has come up with a menu of its merchandises prices (see appendix 4). The organization believes that since the prices start off low, they will attract many customers, resulting in many other customers wanting to purchase the merchandise as the price slowly goes up, raising more funds for the