What are the reasons behind the seasonal clothing discount?

Seasonal clothing is discounted because they have a large price elasticity of demand. Selling them at a reduced price generally can greatly increase the sales volume of goods.

When the four seasons alternated, they went to clothing malls or shopping malls in many cities. It can be seen that many season-changing garments are “staged” collective bargains to attract consumers to purchase. Why do garments mostly sell at discounted prices as the season changes, and how much is discounted? And other commodities, such as rice, cooking oil, etc., will not be discounted for the season? This needs to be solved from the principle of product price elasticity of demand.

Price elasticity of demand is an extremely widely used concept in economics. It refers to the extent to which the change in the demand for a commodity responds to changes in the price of the commodity over a certain period of time, that is, the ratio of the amount of change in demand for the commodity to the amount of price change. If the ratio of the demand variation of a commodity to the price variation is greater than 1, then it can be said that the commodity is a product with a flexible demand; if the ratio is less than 1, it means that the commodity is a commodity with a lack of elasticity. We all know that according to the general demand law of goods, their demand is negatively related to prices, that is to say, the decline in the price of goods will bring about an increase in the demand for goods. Therefore, if the demand for flexible goods, then the price reduction will lead to a substantial increase in the sales of the product; and for the lack of demand for flexible goods, the price changes in the market demand has little effect.

Seasonal clothing is often discounted because its demand is flexible and its price elasticity is very high. Therefore, the sale of price reductions can generally improve the sales of goods. On the contrary, commodities such as rice and edible oil are necessities of life. No matter whether the price rises or falls, people must consume it. Therefore, the price elasticity of demand is very small. For another example, household appliances are also products that lack demand for flexibility. First, because of its long service life, coupled with the current popularity of household appliances in China, the demand for home appliances has gradually stabilized, and the number of purchases is not strong; second, the price of home appliances itself is high, and small discounts have an impact on sales. Not too much. Therefore, unless there is a very large discount discount, price promotions will not help to increase sales of home appliances.

Through the theory of demand price elasticity, we can also understand other phenomena in life. For example, during the Spring Festival season, tickets for train tickets were difficult to obtain. Some people suggested that train tickets should be subject to price increases. This would greatly reduce the number of passengers and ease the tension on train tickets. If we are familiar with the theory of demand price elasticity, we know that this proposal is not feasible. Because the Spring Festival train tickets for the people who urgently need to go home to reunite, to some extent is no different from the necessities of life, the price increase to reduce the number of train ticket purchases to promote little. The increase in ticket prices for Spring Festival train tickets does not ease the situation in which one vote is hard to come by. It will only increase the cost of returning ordinary people, especially many low-income earners, to home reunions.

As far as companies are concerned, the key to whether they adopt price-reduction sales strategies or price-raising sales strategies is to analyze whether the demand for goods is flexible. For example, some international famous brand products are almost never discounted, and adopt high-price sales strategies precisely because their product demands are relatively stable, and discounted sales is not the optimal strategy for maximizing profits.