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Business strategy
Situations in which lowering products prices can be a problem.
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[QUOTE="Mikes smithen, post: 308706, member: 90053"] Lowering product price can have both positive and negative effects on a business. While it can attract more customers and increase sales volume, it can also lead to several problems: REDUCED PROFIT MARGINS: Lowering product price often means reducing profit margins. If the cost of producing or delivering the product remains the same, reducing the price can eat into the profits of the business. This can be a problem if the business relies on these profits to stay afloat or to invest in growth. PERCEPTION OF LOWER QUALITY: Lowering product price can also create the perception that the product is of lower quality. Customers may assume that a lower price means lower quality, which can lead to decreased sales or damage to the brand's reputation. REDUCED PERCEIVED VALUE: If a product is already considered to be high quality and the price is lowered, customers may begin to question the value of the product. This can lead to a decrease in sales and revenue. DIFFICULTY RAISING PRICES AGAIN: Once a product's price has been lowered, it can be difficult to raise it again. Customers may have become accustomed to the lower price and may be resistant to paying a higher price in the future. NEGATIVE IMPACT ON COMPETITORS: Lowering product price can lead to a price war with competitors. This can result in a reduction in profits for both businesses and can create a negative impact on the industry as a whole. In summary, while lowering product price can attract more customers and increase sales volume, it can also lead to several problems such as reduced profit margins, the perception of lower quality, reduced perceived value, difficulty raising prices again, and a negative impact on competitors. A business should carefully consider these factors before lowering product price and ensure that it is the right decision for their overall business strategy. [/QUOTE]
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Situations in which lowering products prices can be a problem.
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