Question

Which of the following are benefits of the high/low pricing strategy?

1. it attracts consumers at both ends of the price-sensitivity scale
2. it serves 2 different market segments
3. it generates excitement due to the limited duration of sales.

Answer 1

The high/low pricing strategy benefits businesses by attracting consumers at both ends of the price-sensitivity scale, serving different market segments, and generating excitement through limited-time sales.

Step-by-step explanation:

The high/low pricing strategy has several benefits:

1. It attracts consumers at both ends of the price-sensitivity scale. Some consumers are willing to pay higher prices for perceived quality, while others are more price-conscious and seek lower prices.
2. It serves two different market segments. By offering both high-priced and low-priced options, a business can appeal to different groups of consumers with different purchasing behaviors.
3. It generates excitement due to the limited duration of sales. By periodically offering sales and discounts, businesses create a sense of urgency and encourage consumers to make purchases.

Conversely, when prices are lowered during sales, it attracts more price-sensitive customers. This approach is also beneficial for businesses. By periodically offering sales, businesses can clear out inventory, thus allowing for stock of new or in-demand items. Furthermore, sales can generate buzz and increase foot traffic or website visits, potentially leading to additional purchases of regularly priced items.