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Retail Promotion Strategies
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Flashcards
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Multi-Save Promotions
Multi-save promotions, such as '3 for 2' deals, offer a discount when multiple items are purchased together. Effective for encouraging customers to buy in bulk and increasing overall purchase amounts while potentially reducing per-unit profit margins.
Referral Programs
Referral programs reward existing customers for bringing new customers to the business, often with discounts, store credits, or gifts. These programs can be effective in acquiring new customers and increasing loyalty among existing ones.
Seasonal Sales
Seasonal sales offer discounts or promotions on items related to an upcoming holiday or season. They are effective in clearing out seasonal inventory and tapping into consumer's festive shopping behavior but can also erode profits if too aggressive.
Free Shipping
Offering free shipping can incentivize customers to complete online purchases, often used as a threshold incentive (e.g., free shipping on orders over a certain amount). It can increase customer satisfaction but also can impact profit margins.
Flash Sales
Flash Sales are limited-time offers that usually involve high discounts. They are highly effective in creating a sense of urgency and boosting impulse buys, though they might attract mostly deal-seeking customers and not foster brand loyalty.
Sampling
Providing samples gives customers an opportunity to try products before buying them. This promotion is especially effective for new products or brands entering the market and can lead to increased sales and customer loyalty if the product is well received.
Early-Bird Specials
These are promotions offered to customers who purchase or show up early. They are effective in driving sales during normally slow periods and can help in managing customer flow throughout the day.
Buy Now, Pay Later
This option allows customers to purchase and receive items immediately but pay for them over time. While it can boost conversion rates by lowering initial cost barriers, it can also increase the risk of returns and non-payment.
Happy Hours
In retail, 'happy hours' are periods of time where discounts are offered to increase traffic during slow periods. Effective in encouraging purchases during off-peak times, but the discounting can impact profit margins if not strategically timed.
Loss Leader Pricing
Loss leader pricing involves selling a product at a loss to attract customers in the hope they will make additional purchases of more profitable goods. This strategy can effectively draw in customers but runs the risk of shoppers only buying the loss leader product.
Loyalty Programs
Loyalty programs reward customers for their repeated business with points, discounts, or exclusive offers. They are effective in retaining customers and increasing the customer's lifetime value but require a well-maintained system to track customer purchases and rewards.
Exit Intent Offers
These are special deals presented to online shoppers as they are about to leave a website, often in the form of a pop-up. They can reduce cart abandonment and capture otherwise lost sales, but if overused, may lead customers to expect last-minute deals.
Couponing
Coupons provide a discount on the price of specific items when they're purchased. They can be distributed in-store, through mail, or digitally. Couponing is effective in encouraging trials of new products and can incentivize repeat purchases if used strategically.
Gift with Purchase
Customers receive free gifts upon purchasing a certain amount of products or specific items. This is an effective strategy for increasing the perceived value of the purchase and encouraging customers to spend more to reach the threshold for the gift.
Cross-Selling
Cross-selling involves encouraging customers to purchase complementary items or services in addition to their primary purchase. This approach increases the average order value and enhances the customer experience if the suggestions are relevant.
Exclusive Access Sales
Exclusive sales offer special access to certain groups (e.g. VIP customers) before opening up to the general public. These can create a feeling of exclusivity and incentivize engagement, though they may alienate non-qualifying customers.
Percent-Off Sales
A straightforward discount of a certain percentage off the retail price. This type of promotion can stimulate sales and is effective when clearing inventory, but frequent use can lead to price conditioning and decreased perceived value.
Up-Selling
Up-selling is the practice of encouraging customers to purchase a higher-end or premium product compared to what they are currently considering. This strategy can significantly increase the average order value and profitability per transaction.
Price Bundling
Price bundling offers several products for sale as one combined product at a lower price than if they were bought individually. This strategy is effective for increasing the average transaction size and moving less popular items along with popular ones.
BOGO (Buy One, Get One)
BOGO is a type of sales promotion where customers get an additional item for free or at a discounted rate after purchasing one at full price. It is very effective in increasing the short-term sales volume by encouraging customers to buy more than they initially intended.
Time-Based Pricing
Time-based pricing offers different prices at different times of the day, week, or year. This can manage demand and maximize profits during peak times, but may be confusing to customers if not communicated clearly.
Volume Discounts
Volume discounts are provided when customers buy in large quantities, offering a reduced rate per unit. This practice encourages bulk purchases and can improve inventory turnover but could reduce overall profit margins.
Charitable Promotions
A portion of the sales from charitable promotions is donated to a worthy cause. They can enhance brand image and customer goodwill, leading to increased sales, but should align with the company's values to be perceived as authentic.
Membership Discounts
Membership discounts provide special pricing or benefits to members of a club or organization. Effective for building a committed customer base and fostering loyalty, but require an infrastructure to manage memberships and rewards.
Price Matching
Price matching guarantees customers that a retailer will match a competitor's lower price on identical items. It builds customer trust and retains price-sensitive shoppers but can erode profit margins if not carefully managed.
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