Confessions of the Pricing Man: How Price Affects Everything

by Hermann Simon

For a price decrease , the more the customer notices it, the greater the positive volume effect will be. This places the onus on the supplier to use communications to increase the price elasticity of the product or service. Empirical studies have shown that a volume increase from a price cut is significantly higher when the action is supported with special price-oriented advertising , additional placements, or special signage. This volume increase is more necessary than ever during a crisis , but precisely in such tough times, communication budgets are also limited. This presents the company with a dilemma. The company might need to make more price reduction s, but lacks the money to communicate them effectively.