The paper 'Concept of Price Discounting and Its Prevalence in Businesses in the Corporate World" is a perfect example of finance and accounting coursework. This paper focuses on the concept of price discounting and its prevalence in businesses in the corporate world. It also explores ways in which a business can achieve its objectives by employing price discounting in its operations. In addition, the paper addresses the issue of brand equity and how it is affected by price discounting. Lastly, the paper explains how a brand manager can create a discounting strategy that promotes brand equity. Prevalence of price discounting According to Smith (2011, pp.
80-82), price discounts entail incentives used by businesses to attract repeat business from the consumers. Here, the primary idea is to offer customers a sense of getting an extra value by paying lower prices than the normal ones. Price discounting involves one of the pricing strategies used by businesses in order to improve their performance (Greene 2011, pp. 67-71). This strategy is majorly used by firms to create a competitive difference against its competitors. As a result, firms that use price discounting become value leaders in the market.
The use of price discounting is prevalent today because of a number of reasons. To start with, price discounting is prevalent because it increases consumer traffic when used as a short term plan. This is because the discounts used by retailers attract many clients in their stores (Greene 2011, pp. 67-71). Moreover, clients tend to shift to competitive commodities that are lowly priced. As a result, high consumer traffic increases the number of sales of a certain product under price discounting. Secondly, Smith (2011, pp.
80-82) says that price discounting is commonly used by businesses in order to enhance repeat customers in the organization. Customers are attracted to lower prices of competitive products. Price discounting helps a business win their confidence; hence having many repeat customers than its competitors. Thirdly, price discounting is beneficial in business because of the increases in the number of profits and revenues attained by retailers. This occurs whenever there is a short-term discount time, for it allows a firm to reduce inventory and temporarily increase revenues (Smith 2011, pp.
80-82). Additionally, price discounting prevalence in business lies on the retailers need to gain the consumers’ loyalty (Smith 2011, pp. 80-82). Moreover, price discounting model can be employed by businessmen as a public relations device. Ultimately, retailers gain more income in sales than it was prior to price discounting. Price discounting is also influential when a business wants to project future cash flow and plans. On the side of the buying business, there is a reduction in the costs of operations; hence, an increase in the company’ s overall profit potential (Greene 2011, pp.
67-71). Besides, price discounting happens when retailers want to move products that are being stopped by the manufactures. They can also engage in price discounting when certain products have not caught the clients attention at the present labeled retail price (Wreden 2007, pp. 78-80). In this case, the key issue is allowing the retailer an opportunity to recover some part of the investment in the stock, for it is explicit that the products will no longer be generating the anticipated profits. With regard to the way a price discount is applied to the merchandise, the retailer is most likely to recoup primary costs, and make little profit in the course of sales.