Promotional Pricing Strategy: Children's Outdoors Swing Sets

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Children’s outdoors swing sets are not a product that people tend to buy during economic downturn. In reality, during economic downturn consumers prefer to save money and only buy products that are necessary for everyday life. Therefore, a swing set doesn’t fit into their lives and wont purchase the product. In theory, reducing a products price would be effective in economic downturn, however lowering a products price can have negative consequences like lowering profit margins, the negative psychological effects a lower price plays on a consumer, and the effect it would have on brand perceptions. Given these negative effects the company should consider promotional pricing strategies or a geographical pricing strategy. Firstly lowering a products price has a direct effect on the profit margin and profit you make in your company. When lowering the price of a product you would make less revenue per product while not lowering any cost that you have in manufacturing the product. Therefore, it leads to a lower profit margin …show more content…
Economic downturn does hurt a consumer’s ability to purchase products, but it does not affect all consumers. Therefore the company should only lower prices in specific regions that have been effected the most while keeping the same price or even increasing the price in other locations. If the company targets big cities and metropolitan areas with people that have high incomes they do not necessarily need to lower prices. These people can afford products even if there is economic downturn so there is no problem with the price and thus it would make no sense to drop the price and suffer negative psychological effect. Furthermore, lowering pricing in geographical areas that are affected by economic downturn could be effective. These consumers would appreciate a price cut and will look at the brand more positively as they are meeting specific needs of these geographical

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