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For example: if a firm sells a product to their customer for a cheaper price and that customer resells the product demanding a higher price from another buyer then the chances of the firm failing to make a higher profit is predicted because they could have sold their product at a higher rate than the re-seller and made further profit. [24]
Pricing is the process whereby a business sets and displays the price at which it will sell its products and services and may be part of the business's marketing plan.In setting prices, the business will take into account the price at which it could acquire the goods, the manufacturing cost, the marketplace, competition, market condition, brand, and quality of the product.
The price reduction may be a percentage marked on the package. Price-pack/Bonus packs deal: The packaging offers a consumer a certain percentage more of the product for the same price (for example, 25 percent extra). This is another type of deal "in which customers are offered more of the product for the same price". [2]
Profitability of this method stems from its ability to eliminate potential customers who are driven only by price and attract new value-oriented customers from competitors. For example, Starbucks raised prices to maximize profits from price insensitive customers who value gourmet coffee, while losing consumers who seek cheaper prices. [8]
In addition to the absolute pass-through that uses incremental values (i.e., $2 cost shock causing $1 increase in price yields a 50% pass-through rate), some researchers use pass-through elasticity, where the ratio is calculated based on percentage change of price and cost (for example, with elasticity of 0.5, a 2% increase in cost yields a 1% increase in price).
The aim of promotion is to increase brand awareness, create interest, generate sales or create brand loyalty. It is one of the basic elements of the market mix, which includes the four Ps, i.e., product, price, place, and promotion. [1] Promotion is also one of the elements in the promotional mix or promotional plan.
Trade Promotion refers to marketing activities that are executed in retail between these two partners. Trade Promotion is a marketing technique aimed at increasing demand for products in retail stores based on special pricing, display fixtures, demonstrations, value-added bonuses, no-obligation gifts, and more.
Marketing mix modeling (MMM) is an analytical approach that uses historic information to quantify impact of marketing activities on sales. Example information that can be used are syndicated point-of-sale data (aggregated collection of product retail sales activity across a chosen set of parameters, like category of product or geographic market) and companies’ internal data.