This leads to consumers preferring lower-priced options which leaves the higher-priced variants to be unsold, piling up in the inventory causing them to lose further value. In case of a market or economic slowdown, it affects the buyer’s purchasing power. It does not take other factors such as the market and economic conditions into account. Price lining is a cost-centric marketing strategy. Disadvantages of Price Lining Susceptible to Market Changes Instead, it helps boost the margins since the spending incurred during the implementation process is offset by the increased pricing. Implementing a few features into an existing range of products and services does not affect the profit margins. The consumers use the cheaper options provided due to the implementation of price lining as a method to demo a certain product or service and seeing if it fulfils their needs before getting the higher-priced offerings. Price lining provides an added indirect benefit to consumers in the fact that they can buy a certain product with lesser features and benefits for cheaper just to get the hang of it or to see if it actually is of any use to them. This data can be immensely helpful in making sure that the higher demand products are always kept in stock, helping optimize their inventory and manage their raw materials and supplies. Implementing price lining means that over a certain period, the business gains more insight and data as to which product sells the most and which doesn’t. This brings in more choices for the consumer to customize or choose a product according to their needs instead of waiting for the company to release a new product that suits theirs. Not every consumer has the same tastes or interests and in order to fulfil a larger range of consumers, businesses have to either create an entire line of new products to cater to the demands of the different consumer types or just use an existing product and tweak its price and features on offer to provide for the consumers. Advantages of Price Lining Reaching Wider AudiencesĪs seen with the examples, the use of price lining helps businesses reach a much larger pool of audiences with just a limited range of products in terms of uniqueness. Let’s look at the advantages and disadvantages of price lining. Take razor blades for example – a company may offer a razor blade for $5 and the same razor with an added feature such as an interchangeable blade for a slightly higher price. The consumables market is a great example of price lining in action.
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