Author Topic: Should Promotion Always Be Maxed Out  (Read 8283 times)

halfstep

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Should Promotion Always Be Maxed Out
« on: January 27, 2011, 02:18:13 PM »
Hi, should promotion always be maxed out? I get chosing promotion number to get the maximum market share, but I find when i lower my promotion numbers, my operating profit and net profit goes up, (after adjusting all assemble, and labor of course). why is this? if market share goes up, and provided my price is higher than cost, shouldn't Net profit go up with market share?

WinBusinessStrategyGameTips

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Re: Should Promotion Always Be Maxed Out
« Reply #1 on: January 27, 2011, 10:33:11 PM »
This is now a strategic question, which there is no truly wrong or right. Higher quality, lower models means hgher net profit per camera in most circumstances. Whereas as medium quality, higher models means higher market share, but less profit per camera. Sometimes one strategy is better than the other given how many people in the Industry are doing the alternate strategy. Be careful of the forecasting square on the left, it's just a forecast, but do use it as a guide to what may be a better strategy under your Industry conditions.
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halfstep

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Re: Should Promotion Always Be Maxed Out
« Reply #2 on: January 27, 2011, 11:57:24 PM »
thanks for the speedy reply, but in my thread starting post, I meant promotion as discounts, number of week, and the number of promotions.

After deciding my product design, PQ and number of models. I go to the marketing page and i find that when i max out my promotion at 3/3/20%, I make less profit (eg, 16% discount gives me more net profit than 20%, also I didn't go to 4 weeks for promotion because of diminishing returns).

wondering your experiences and your personal decisions regarding promotion number, length, and discounts. If you maxed it out at 3/3/20%, did you decrease it later on for any purpose or did you leave it maxed out at this number to keep market share?
« Last Edit: January 28, 2011, 12:00:53 AM by halfstep »

WinBusinessStrategyGameTips

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Re: Should Promotion Always Be Maxed Out
« Reply #3 on: January 29, 2011, 05:06:25 AM »
Sometimes you do have to change the numbers. You have to test it and see.
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