The store has a surplus of condiment products from its supplier, so it sells its
condiments at 90% off what other local stores are selling.
What are some potential benefits and drawbacks of this strategy for the store?
Benefits:
1. Clearing inventory: The store can quickly clear out the surplus inventory of condiments.
2. Attracting customers: The low prices may attract customers who are looking for deals.
3. Improved cash flow: The store can generate revenue from selling the condiments, which can improve cash flow.
Drawbacks:
1. Brand dilution: The condiment brand may be associated with lower quality due to the deep discount.
2. Loss of profit margin: Selling the condiments at 90% off means the store will take a considerable loss on each item sold.
3. Negative impacts on relationships with suppliers: The supplier may not be happy with the low prices at which their products are being sold.