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A discount is a reduction offered by a seller to a buyer from the normal or listed price of a product or service. In marketing management, discounts are important promotional tools used to attract customers, increase sales, encourage bulk purchases, clear old stock, and strengthen relationships with distributors and retailers. Discounts may take different forms depending upon the basis on which they are offered and the period for which the benefit is available. Two important forms are cumulative discount and non-cumulative discount. Both are designed to influence buying behaviour, but they differ significantly in their conditions, objectives, and effects on customer loyalty and sales performance. A cumulative discount is a discount that is calculated on the basis of the total quantity or total value of purchases made by a customer over a specified period. The purchases made during different transactions are added together, and when the customer reaches a predetermined level, the customer becomes eligible for a discount or rebate. Thus, the benefit accumulates over time rather than being determined by a single transaction. Cumulative discounts are particularly useful when a company wants customers or intermediaries to make repeated purchases. For example, a manufacturer may announce that a retailer will receive a 2 per cent discount if annual purchases reach ₹5 lakh, 4 per cent if purchases reach ₹10 lakh, and 6 per cent if purchases reach ₹15 lakh. The retailer may purchase goods several times during the year, but the total value of those purchases is considered for determining the applicable discount. In this way, the buyer is encouraged to continue purchasing from the same seller in order to achieve a higher discount level. Cumulative discounts _______ __________ _______ ____ ___ _____.
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