Final answer:
One potential disadvantage of using promotional tools that focus on lowering prices is a reduction in a business's profits and the potential negative impact on the business's reputation and brand image.
Step-by-step explanation:
When a business lowers its prices to compete with other firms, it may attract more customers, but it can also lead to a decrease in profit margins. This is because the lower prices may not fully cover the costs incurred by the business, resulting in lower overall profits.
The potential disadvantage of using promotional tools that focus on lowering prices is that it can result in a reduction in a business's profits.
Furthermore, engaging in a price war with competitors can create a cycle of continuous price reductions, making it difficult for the business to maintain profitability. If the business cannot sustain the lower prices or if a competitor offers an even lower price, it can be challenging to maintain a competitive edge and retain customers.
Additionally, relying solely on price reductions as a promotional strategy can undermine the perceived value of a product or service. Customers may associate lower prices with lower quality, which can have a negative impact on the business's reputation and brand image.