May
15
2013

Essay: Reasons for using price discounting method to increase brand equity

A second main reason of using the price discounting method is to solve financial problems of a firm. There are some incidences in which the revenues of a firm are too low to meet the financial obligations (Aaker, 1991). In this case, the policy makers in the firm may consider price discounting to increase sales and thus increase the revenues of the firm in a short period of time.

Although the profits earned are lower than those earned at normal prices, the revenues are high and the difference in revenues covers the difference in profits. Price discounting is witnessed in many parts of the world and especially in Malaysia at the end of every year increasing the sales and achieving the set targets and finally solving the financial problems a firm faces.

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