Why Knowledge Of Products And Services Is Critical For Global Companies To Possess To Be Successful, The Problems With Being A Loss Leader In A Compet

This essay sheds light on why knowledge of products and services is critical for global companies to possess to be successful, highlights the problems with being a loss leader in a competitive market, identifies the factors that drive the illogical b... Read more

This essay sheds light on why knowledge of products and services is critical for global companies to possess to be successful, highlights the problems with being a loss leader in a competitive market, identifies the factors that drive the illogical buyer behavior of customers, and punctuates the benefits of companies leveraging the price skimming strategy as their primary pricing strategy. The contention that knowledge of products and services is crucial for businesses to posses has merit since companies are dependant on innovating and providing valuable products and services to the market to generate profits. Lack of product knowledge and service knowledge can lead to a corporation's bankruptcy. Moreover, selling products at a loss can financially devastate a company in a competitive market in both the short haul and long haul if it does not elicit the outcome they forecast. This loss leader strategy may not be sustain and may backfire as companies hemorrhage money and have less investment capital and working capital to leverage, especially if being a loss leader does not bear a profitable long term outcome. Illogical buyer behavior of customers can be fueled by a copious amount of factors, such as impulsiveness and stimulating emotions. An exorbitant amount of consumers do not research prices, will pay any premium price for a brand name product, live above their means, and buy based off a product's extrinsic value. It can be beneficial to leverage a price skimming strategy for ample reasons. For instance, by price skimming the market, the price skimming strategy allows companies to maximize their profit margins since they maximize seller surplus at all levels of the price drops. Less