Definition of Price Lining
Retailers use this method to put items into cost groups to put different quality types into the heads of consumers.
Description of Price Lining
Here, the greater the price, the more quality an item is. If done so efficiently, an adequate price cut is placed in the middle of groups to let potential shoppers know of the difference in quality.
Advantages of Price Lining
For one, it gives purchasing value to shoppers. It also helps businesses make more profit. However, they don’t need to invest a lot into it. You additionally don’t have to fixate on multiple items and can instead do so on just one, which decreases marketing and work expenses. It’ll also decrease your stock and as a result, lowers the storage expense.
Disadvantages of Price Lining
It only focuses on the cost. It doesn’t take into consideration either inflation or popular trends. If the market fluctuates, for example, shoppers will look for the cheapest options so businesses will be left with more expensive items in stock.