Promotion Pricing

Promotion Pricing

Promotional pricing refers to the strategic use of temporary price reductions, discounts, or special offers to stimulate customer demand, increase short-term sales, or boost product visibility. It’s a common tactic in competitive markets to attract new customers, clear out inventory, or drive traffic during key seasons. However, understanding the impact of these promotions and setting the optimal promotional price is complex and challenging.

Research techniques like A/B testing, conjoint analysis, and price elasticity studies help identify the optimal discount level that drives sales without a loss in profit margins. Segmentation analysis reveals which customer segments are most responsive to promotions, allowing companies to target only the most price-sensitive customers with discounts while maintaining higher prices for less price-sensitive segments.