Question: Is Offering Low Prices Always Good?

Are Chinese products low quality?

Factories in China sometimes churn out cheap, poor quality products.

But many are indeed capable of manufacturing products that are both high tech and high quality.

In fact, many importers continue to find success sourcing products from China, even as manufacturing wages continue to climb there..

What companies use a low cost strategy?

The obvious example of a low-cost leadership business is Walmart, which uses a top of the line supply chain management information system to keep their costs low and, consequently, their prices low. Walmart’s system also keeps shelves stocked almost constantly, translating into high profits.

What are the issues with being a low cost supplier?

Perception of Quality In some cases, you may be forced to sell product at a loss to remain competitive. Always being the lowest-priced supplier sometimes creates the perception that your product quality is lower than that of the competition, according to Karl Heil, writing on the Reference for Business website.

Why is Chinese quality so poor?

Products made in China are not always of poor quality. Some of the reasons why product quality might be poor are: 1. Suppliers aren’t willing to pay for quality raw materials,the samples come with high quality material,and cheaper materials by mass production.

Does product quality enough to justify expensive pricing?

When a product brand is superior in quality to its competitors, it is supposed to be also more expensive. Vice versa, a product having a higher price will, at the same time, also be a product of higher quality. … In their eyes, a more expensive product is better than a cheaper one.

What are the disadvantages of competitive pricing?

What are the disadvantages of competitive pricing? Competing solely on price might grant you a competitive edge for a while, but you must also compete on quality and work on adding value to customers if you want long term success. If you base your prices solely on competitors, you might risk selling at a loss.

What are the benefits and disadvantages of using a low price strategy?

Low Price Strategy ProsIncreased Sales Volume. This is probably the main reason why you’re considering setting low prices for your products or services. … Decrease in Production Costs. … Reaching Wider Audiences. … Credibility. … Discounts. … Perception of Quality. … Customer Service.

Does price equal quality?

As Clark insightfully advice, “Price is often a proxy for quality, and when you put yourself at the low end, it signals that you’re unsure of your value — or the value just isn’t there. Either can be alarming for prospective clients.”

Why is made in China bad quality?

In order to improve their profits, those big companies were blindly willing to accept lower quality products, labelled “Made in China”. The label “Made in China” known as cheap and poor quality actually came from the western capitalistic greed for profits.

Does expensive mean better quality?

We have learned to think that expensive price means good quality. And at the same time low cost means low quality but it also means good value for the customers.

What are 4 advantages of prices?

With prices: prices serve as a link between products and consumers, allocation easy because prices are neutral , flexible and have no cost. must find another system such as rationing, allocation difficult because of problems with fairness, high cost of administration and less incentive for people to work.

What is a low cost strategy?

A pricing strategy in which a company offers a relatively low price to stimulate demand and gain market share.

Does a low price mean bad quality and poor value?

Depending on which naive theory consumers use, a low price can indicate either good value or low quality, whereas a high price may imply either poor value or high quality, according to a new study in the Journal of Consumer Research.

What does everyday low price mean?

(retailing definition) A policy or strategy of retail pricing whereby presumably low prices are set initially on items and maintained, as opposed to the occasional offering of items at special or reduced sales prices. …

Why is stuff made in China so cheap?

Because of the high volume of materials and resins ordered by Chinese companies, the pricing would be as low as it could be. … Labor is abundant and cheap in China because even though 300,000 have risen into the middle class and above, this still leaves one billion people living at the poverty level.

Does high price mean quality?

It’s because when people prefer to ‘buy local,’ they more frequently base their decisions on price as a perception of quality, research shows. … “Consumers tend to use price to judge a product’s quality when their local identity is most important to them.

What is a high low pricing strategy?

High low pricing is a pricing strategy in which a firm relies on sale promotions. … In other words, it is a pricing strategy where a firm initially charges a high price for a product and then subsequently decreases the price through promotions, markdowns, or clearance sales.

What pitfalls should low cost providers avoid?

PITFALLS TO AVOID IN PURSUING A LOW-COST PROVIDER STRATEGY:Engaging in overly aggressive price cutting does not result in unit sales gains large enough to recoup forgone profits.Relying on a cost advantage that is not sustainable because rival firms can easily copy or overcome it.More items…