Originally Posted by chanomatik
You can create customer loyalty on a bargain, though.
The problem with "bargains" is that they're:
A) not profitable, and
B) risk losing a lot of loyal customers when prices are raised
So, every year you have a bargain, you get more sales (which can be detrimental to profits if you're losing money per vehicle), and when you end it a large percentage of those customers will not buy again.
Its similar to a price leader strategy - sure, you can sell your stuff to price shoppers for a while and inflate your numbers, but price shoppers are also notoriously likely to jump ship the second your prices go up. Better to produce something at a profitable amount, market its quality, and attract the customers that really value quality.
So what's the result of a "bargain" deal? Lots of unprofitable sales and lots of runoff when the sales end. It's definitely not a good position to be in.