So why do companies spend so much on price promotions?Clearly price promotions are generally run at a loss, otherwise there would be more of them.And the bigger the increase in sales at promotion prices, the bigger the loss.While short-term price promotions can have legitimate uses, such as reducing excess inventory, it is the recognizable increase in sales that is their main attraction to management, which is therefore reluctant to abandon this strategy despite its effect on the bottom line.
Q13:The passage suggests that evidence for price promotions’ “effect on the bottom line” (line 40) is provided by
A.the lack of lingering aftereffects from price promotions
B.the frequency with which price promotions occur
C.price promotions’ inability to attract new customers
D.price promotions’ recognizable effect on sales
E.the legitimate uses to which management can put price promotions
