This is a very good concept that can be implemented in marketing(don't know whether it is already implemented). An increase in the price of 1 product can lead to a decrease in sales, but can also lead to an increase in the sales of the next costlier product of the same company). To prove this, I will give an example at the end but the reason is explained below.
If a product is used on a regular basis and is part of the habit of a normal customer, then it is quite important to the customer. At the same time, a small change in the price of the product may still be tolerated since it is a habit product but how long will they tolerate the price increase???----- To the extent that the next best product can be afforded and be made part of that habit.
This in turn can be quite helpful for the company itself, more revenue and a product that was in a constant phase might increase its life cycle more. Well its not a suggested concept but it is worth trying!! If not tried atleast it is giving you some return on the damage that you are definitely going to incur with the increased product cost.
Example---A BIT WEIRED BUT DEFINITELY INTERESTING
Gold flake smaller size was Rs 3 initially for a long time even last year too but it became 3.5 and now it is 4 per ciggarete. But the most amazing thing is Gold flake king is Rs 5 per ciggarete and its price is stagnant for last 2 years. Now can we argue the fact that the reason for increasing the price of Gold Flake was increase in tax or increase in the price in tobacco or the company wanted to increase profit percentage. All the three mentioned reasons can be challenged because the stagnant price of the latter one is a justification for that. But a thorough market research came up with the following conclusion that :Sales of Gold flake King has rised exponentially where the latter has dropped just a bit. Wow!!!
Double gain for the manufacturer.
How??
Some part of the customer for Gold Flake decided to shift to the next segment of Gold Flake King, thereby retaining the brand, and the company retaining a large chunk of its earlier customer.
Secondly The Gold Flake king product which was in a declining phase or at a stagnant phase is now up and running and has become a new leader in Rs 5/ Ciggarete market segment.
The profit percentage of the manufacturer has ultimately increased.
Not a bad strategy, isn't it???? ;) ;) :)
Something I would like to share about me
- askforsubhro
- Burdwan,Howrah, Kolkata, West Bengal, India
- I like to envy because without envy you will not be able to improve yourself. I respect my friends a lot and their abilities acts as a source of inspiration for me. Someone told: ' Wiseman learns from others mistakes' My modification: ' Wiseman learns quickly and from any mistake he sees ' My ambition in life: I hope not to hurt anyone, because thats the last thing i want to do in life, hopefully if I pass by someone whom I know he/she sees me and remembers a good impression about me always.
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