How do reputed companies sometimes sell branded products at discounts of up to 70% over the regular sales price? Does it mean that the production costs are very low and they make obscene profits?

Sometimes it's a loss leader. Sometimes the profit is obscenely high.

Of course, it depends on whether you are talking about jewelry or refrigerators or shampoo.

Pittu,

Firstly, welcome to this great site!

There are internal reasons, behind it, sometimes delibrate, sometimes out of sudden need to dispose of the material and earn quick bucks. In off-season, the companies reduce the prices to dispose off whatever they can, so that they have money, as they do not want to keep the material till the next season comes or reaches. Sometimes, if the material supply is more than the need, price is reduced to attract the consumers or customers, thereby creating an artificial need, as some buyers buy only because the price is less. Still, there are some management decisions, based on quality factor and other reasons.

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Originally Posted by Kahani Punjab

Sometimes, if the material supply is more than the need, price is reduced to attract the consumers or customers

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This is done also with the idea that the customers will then stick around the shop or online site and purchase more items that are not on sale.

If butter has been greatly reduced at my grocery store, I will buy it and also purchase some cheese (after noticing that in the same refrigerated case) and then maybe crackers to go with the cheese and perhaps a beverage (soda, tea) to round out a future snack or light lunch.

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Originally Posted by Wondergirl

This is done also with the idea that the customers will then stick around the shop or online site and purchase more items that are not on sale.

If butter has been greatly reduced at my grocery store, I will buy it and also purchase some cheese (after noticing that in the same refrigerated case) and then maybe crackers to go with the cheese and perhaps a beverage (soda, tea) to round out a future snack or light lunch.

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And displays are set up to lead you "here" and then point you "there."

My supermarket had ground beef (of all things during Christmas week!) on sale - and piled all around the meat case were the makings for chili, hamburgers, anything else you can use "beef" in.

I also think the "limited quantities" comes into play when it's a big item. I read this past week that in NY "limited quantities" means each store must have at least six - six? People trample each other when there are only six available?

If you've ever studied grocery store design and set-up, you know the spices are "conveniently" shelved near the flour and sugar and other "raw" ingredients for baking, the cereals near the juices, and so on. During high school, my younger son worked for a major grocery chain and learned all about product placement in stores and how to get the customer to spend more than he wants to.

What always annoys me is when the grocery store shifts products around so that the staples and greatly reduced items that I want end up in a different aisle or on a different shelf, causing the shopper to unconsciously shift his thinking and notice (and buy) other products that he had no intention of purchasing. My husband will stop at the store for a reduced-price gallon of milk and bring home two bags full of stuff... The grocers see him driving into the lot and cheer.

Wonder Girl,

You said, "If butter has been greatly reduced at my grocery store, I will buy it and also purchase some cheese (after noticing that in the same refrigerated case) and then maybe crackers to go with the cheese and perhaps a beverage (soda, tea) to round out a future snack or light lunch."

This is really really something to learn for me, that in your country in Europe (England, I presume), work is worship and the youngsters learn so much by doing sale-stuff or marketing, while in India, only white-collar jobs are respectable and so we do not get any chance to learn such stuff. What I replied here is on the basis of my perception and thinking and not experience, as you or your youngster has. Your point about your hubby is also so learnable. I recently read a book YOU CAN NEGOTIATE EVERYTHING and it was such a great book to teach such things like how to do shopping , etc.

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Originally Posted by Kahani Punjab

Wonder Girl, this is really really something to learn for me, that in your country in Europe (England, I presume), work is worship and the youngsters learn so much by doing sale-stuff or marketing

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I live in the U.S. near the beautiful city of Chicago.

Most youngsters get their first steady job around the age of 15 or 16 and can learn many valuable skills in customer service and product handling if they are intelligent and alert. The young employees may have very unskilled jobs such as shelving books at a library or working at a fast-food counter or waiting on and clearing tables at a restaurant, but can learn how to speak softly to customers, to answer directional questions politely, and can observe how their managers do business.

I was 15 when I was hired to work in a grocery store and learned how to stock shelves neatly and by expiration dates, how to deal with customers so they would return, and how to handle fresh vegetables so there would be little waste. Those skills in detail, cost-saving, and customer service translated into complementary (associated) skills when I was a teacher, librarian, and counselor.

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Originally Posted by Wondergirl

If you've ever studied grocery store design and set-up, you know the spices are "conveniently" shelved near the flour and sugar and other "raw" ingredients for baking, the cereals near the juices, and so on. During high school, my younger son worked for a major grocery chain and learned all about product placement in stores and how to get the customer to spend more than he wants to..

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Laughing - I HAD to take marketing in College (and I no longer remember why!) and that knowledge was very helpful when my husband owned Pharmacies.

Put the "want to move" stuff at the end of the aisles and so forth.

And it worked!