. Pricing strategies. A. In what situation should a firm offer \"price matching
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Question
. Pricing strategies.
A. In what situation should a firm offer "price matching guarantee"? Will such "price
matching guarantee" increase or reduce profits? Explain.
B. Classical supply-and-demand analysis suggests that when the demand for a
product increases, prices tend to go up. Still, we are now in the holiday season and everyone is
shopping for gifts so there is more demand but many stores offer big discounts instead of
raising their prices. Use the knowledge from the class to explain why holiday sale pricing is a
common practice for retailers.
Explanation / Answer
A. The firm should offer a "price matching guarantee" when the supply decreases. The demand can be pulled off at reasonable prices. This creates customer satisfaction to achieve the product at an affordable rate. There can be complemantary gifts added with the same in order to acquire the price matching gaurantee deal. It helps in increasing the profits of the firm due to high rise in sales.
B. Holiday sale pricing is a common practice for retailers because the customers shop a lot during holiday time. In order to grab their attention, the retailers puts heavy discounts on the products. There are a variety of products sold in discounts during holiday season. This increases the revenues into a large turnover to the retailers. There are many complemantary gifts attached with the products.
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