Question

How do the concepts of Markdowns and Variable Pricing affect each strategy and provide a competitive advantage?

Answer 1

Answer : Businessman used a different price for different set of consumers for the same quantity it is known as Flexible pricing or Variable pricing. Flexible pricing is that pricing strategy in which final price is set up according to the agreement between customer and producer.

Flexible pricing is used by the companies to gain comparative advantage in the business such as :

• Businessman attracted consumer of different segment on the basis of age, geographics, income level etc.
• Different pricing for different customer so that they attract for the product and purchase the product. There strategy is that potential customer has been converted into customer through lower pricing.
• Whenever businessman launched the new product to grab more consumers and attract them.
• To grab the maximum consumers than they gain comparative advantage.
• Database makes it easier.
• Salesman can adjust the price according to bargaining power of the customer.
• Too much cutting can effect the profit.
• At the time of recession it encourages the customer to bargain with seller in the effort to obtain the best price for product and services in the market scanerio.