Brand management, Managing price discounting and its possible impact on Brand equity - Assignment Example

11 Kotler, P & Caslione, J.A. (2009). Chaotics: the business of managing and marketing in the age of turbulence. AMACOM Div American Mgmt Assn. 11 Saxena, R. (2005). Marketing Management. Tata McGraw-Hill Education. 11 Schultz, D.E. et.al. (1998). Sales promotion essentials: the 10 basic sales promotion techniques-- and how to use them. McGraw-Hill Professional. 11 Introduction Price promotions are also known as price discounting. Most companies adjust the list price of the products and allow discounts to get early payments, purchase at a high volume and off season buying.

Price discounting has become the mode of operation for almost all the companies. Some of the products tend to be always on sale. Companies having overcapacity of products gives more discounts. The manufacturer should stop the discounting rate at which they offer to the retailers. This practice may results in losing the long term profits. Kevin Clancy had found that about 15% to 35% of the buyers are price sensitive. People with higher level of income are willing to pay more for better products, quality customer service and for the brand name.

Thus this can prove to be harmful for strong and distinctive brands. On the other hand price discounting can also prove to be useful only if the company gains a concession (Kotler, 1972, p.390). Brand equity is defined as the brands perception in the minds of the consumers. It is about how the employees, customers, the stakeholders and the consumers feel for a particular brand. Brand equity is driven by four factors such as perceived quality, brand awareness, brand association and brand loyalty (Knapp, 2000, p.2). Price discounting Price discounting is used to accomplish different goals.

One of the primary reasons for price discounting is to dispose of the remaining inventory from the previous seasons and stocking in with new merchandise in the stores and the warehouse. This practice is usually preferred by those companies who tend to change their selections of merchandise. Another reason of price discounting is to encourage the consumers to visit the retail outlet. Such strategies are widely used by grocery stores, drug and discount stores where the consumer buys in a bulk. The use of price discounting is known as bait and switch.

Price discounting is also done by retailers in order to create price discrimination between different consumers. This is a process which targets both the price sensitive and price insensitive consumers. The other set of consumers prefers buying when products are put up on sale rather than from competitive retailers. Sometimes retailers offers product at a discounting rate so that the company can have an upper hand from new competitors as well as from the existing ones (Schultz, et.al, 1998, p.188). Objectives for Price Discounting Pricing is one of the biggest pitfalls that a management deals during optimal economy.

But pricing involves a lot of risk when the economy is not stable. Price discounting does work well to achieve the objectives of the company. A retailer prefers price discounting in order to meet their targets and objectives. Price discounting always involves risk, especially when it is not done correctly. It can hamper the business (Kotler & Caslione, 2009, p.58). Therefore there are certain objectives which are well suited for price discounting whereas other is not preferred. The objectives are set by the retailers, in order to achieve the set goals they offer