CLASS-7
DEFINITION OF DISCOUNT
DEFINITION OF DISCOUNT -
Discounts refer to reductions in the price of goods or services offered by a seller to entice customers to make purchases. They are commonly used in retail, e-commerce, and various other industries as a marketing strategy to attract customers, increase sales, and clear out excess inventory.
There are several types of discounts:-
- Percentage Discount:- This is a reduction in price stated as a percentage of the original price. For example, a 20% discount on a $100 item would reduce the price to $80.
- Fixed Amount Discount:- In this type of discount, a specific amount is deducted from the original price. For example, a $10 discount on a $50 item would reduce the price to $40.
- Bulk Discount:- Also known as quantity discounts, these are offered when customers buy large quantities of a product. The discount may be applied per item or as a total discount for the entire purchase.
- Seasonal or Promotional Discounts:- These discounts are offered for a limited time or during specific seasons or promotional events, such as Black Friday sales or end-of-season clearance sales.
- Cash Discounts:- These are discounts given to customers who pay in cash rather than using credit or other payment methods. It encourages prompt payment and helps businesses manage cash flow.
- Trade Discounts:- These are discounts offered to wholesalers or retailers for purchasing large quantities or for other trade-related reasons. The discount is often not shown to the end consumer but is used to incentivize intermediaries in the distribution chain.
- Employee Discounts:- Some companies offer discounts to their employees as a benefit or incentive.
Discounts are an essential aspect of pricing strategies for businesses, as they can influence consumer behavior and increase competitiveness in the market. However, it's important for businesses to carefully consider the impact of discounts on their profitability and brand image.