As an economics major, the very first lessons involve supply and demand. When demand increases, supply should rise to meet the demand without flooding the market with excess. If that happens, the product becomes ordinary and the price lever is utilized in an effort to reduce the supply before demand evaporates altogether.
Designers begin demand creation by developing inspiring products, often working with merchandising and marketing teams for input. Flattering silhouettes. Appealing colors. Uniquely useful items. Faster, smarter, better. Items that make a statement about the person consuming them. Without exposing those things to an audience, the creation has no purpose. Merchants are constantly searching for the fresh, new “stuff” with a target audience, price tolerance, profit margin and end use in mind, often guided by details in financial plans and working with merchandise planning teams. Marketers are critical in getting the story of those products in front of the key audiences using both visual and analytical components for the best ROI. All together, they create demand while walking the razor’s edge of the right amount of supply as well as product expansion opportunities. When the demand for the supply has begun to downtrend, price reduction can be used responsibly to liquidate the excess quantities.
This all leads to the right product, at the right price, in the right quantities at the right time. The ultimate endgame for creating demand and maximizing profit. Otherwise, why bother. Driving demand with the hi/lo pricing game may drive short term results, but will ultimately reduce profitability and shorten the life of a product prematurely.