Quantity discounts are used to induce the retail buyer to purchase larger quantities in a single order. This enables the apparel manufacturer to acquire a larger portion of the retailer's total business and reduces the manufacturer's selling, shipping, and inventory costs. Some of the storing function is also transferred to the retailer.
Some firms allow cumulative quantity discounts throughout the selling season to encourage the retailer to reorder. This improves the visibility of the manufacturer's merchandise on the retail selling floor. When retailers reorder, the merchandise remains available to the customer throughout the selling season.
Seasonal discounts or selling cycle pricing recognizes differences in price elasticity at different stages of the selling season or product life cycle. As the product moves through the selling cycle, demand may become more elastic and therefore prices may be lowered to maximize sales through the use of seasonal discounts. Pricing stages in the selling cycle might be called early purchase price, main season price, late season price, and clearance price. Discounts offered ahead of the selling season stimulate early commitments by retailers. This levels production schedules and allows the manufacturer to make more efficient use of machinery and labor. Discounts may also be offered late in the selling season to increase volume to the break-even point. End of the season discounts stimulate clearance of unsold merchandise to help cover variable costs. Price reductions, such as the use of seasonal discounts, are regarded as a form of sales promotion that is built into the total pricing system.
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