Marketing Management, 16th Edition

Incentives

To make their offerings more attractive to customers, retailers often use incentives such as price discounts, volume discounts (such as buy one–get one free), bonus offerings, and coupons. These incentives, also referred to as sales promotions, aim to generate store traffic and “nudge” customers toward making a purchase.

Retailers vary in the degree to which they use incentives. Two extreme strategies stand out: everyday low pricing and high–low pricing. A retailer using everyday low pricing (EDLP) charges a constant low price with little or no price promotion or special sales. Constant prices eliminate week-to-week price uncertainty and the high–low pricing of promotion-oriented competitors. In high–low pricing, the retailer charges ...