Lowering Prices to boost sales

Lowering Prices to Boost Sales

Insight by Leah

Estee Lauder, P&G and even L’Oreal have all announced intentions to offer consumers lower cost items and smaller sizes of some products in order to drive sales during a down economy.  Although the strategy may provide an initial bump up for these companies, it could be a dangerous decision for two reasons – 1. Consumers who had previously purchased "luxury" line items from these companies may completely abandon the higher priced lines for a similar, lower-priced offering deciding that the lower priced one is "close enough;" 2. Lowering prices on some luxury items (for example, La Mer cream) may cheapen the value of the brand.  It’s a thin and difficult line to walk for these brands.

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