A reduction in sales price will require a higher increase in sales volumes. In a price war situation where demand is essentially constant and therefore overall sales volumes cannot increase, the protagonists are simply reducing the overall amount of profit available to them. Businesses that use reduced prices alone to shore up flagging demand often find themselves in a downward spiral as they chase customers. There is rarely any certainty that sales will be stimulated enough to rise the extra volume needed to compensate, but customers’ fundamental expectations may change.
They may begin to expect ever lower prices. Consciously or unconsciously customers perceive that the balance of power is shifting from the sellers towards them as buyers. Customers find that they can retain more of the overall profit by negotiating shrewdly and quite possible by playing one supplier off against the next, making levels of price-cutting even more sever. The buyer’s gains matches sellers’ losses. If management is able to use marketing techniques to different the business’s offering, effectively looking customers, so that the actual fall in the volume of sales is less than that, them more profit will be the result. A reduction is price will definitely make lot of improvements in sales. Most of the business people are using this strategy to increase their sales volumes. Buyers also feel happy to buy products at low price. So make use of this marketing strategy and enhance your business.