Cost Effective? Part 3 of 3

3. Promotional offers should be priced to be profitable. Customers have become conditioned to expect the highest dollar-value promotions previously offered. So don’t offer promotions that are unprofitable.

4. Promotional prices affect the margin of all products, not just those products that are price-sensitive. Catalogers typically group products into categories — “A” products are price-sensitive commodity products while “B” products are available in alternative locations but aren’t purchased on price. “B” products are purchased based on availability, brand preference or some other criteria other than price. “C” products are unique to a single merchant and are typically not price-sensitive. Catalogers avoid global price-cutting, preferring to maintain margin in “B” and “C” products and selectively cut prices in some “A” items.