off-price labels

Definition:
In terms of consumer acceptability the label featuring Xp off the regular price is the most popular promotion. It is also popular with retailers as it involves none of the dis-economies associated with coupon redemption and also provides the opportunity to feature a price reduction in their local advertising. The actual extent of the price reduction is an important determinant of the level of sampling, and careful thought, and preferably testing, must be given to the selection of a discount. Some prices have the apparent effect of being perceived as less than they really are, and it is these which have the greatest impact on IMPULSE PURCHASES. Obviously, if sales volume can be increased sufficiently the firm may be able both to even out seasonal fluctuations and make a profit. A price reduction is a short-term strategy, however, and the simplest for one's competitors to duplicate. For these reasons it is avoided by companies that are sensitive to a price war wherever possible, e.g. the petrol companies, until in the UK Jet and others pre-empted a sufficient market share through price cutting to make a general price reduction necessary on the part of the 'Big Five' to protect their market share.

Cross-References:
[impulse purchase]

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