Price promotions
What is it? It is a sales promotion based on a sales discount offer.Who benefits? Both retailers and wholesalers depend on price promotions to lure customers into stores and to increase product sales. However, Harvard Business Review states that these gains are merely short term. After the promotion the customer reverts to his old ways. Of more interest to me is the statement that stores may actually be financially worse off when using price promotions. The argument is that the turnover of the product on special will increase at the expense of its competition, while generating a smaller margin of profit due to the sales promotion.
This clip from Small Business News explains the pitfalls for price promotion:
Should I use price promotion? Definitely! What you should NOT to is to make price your point of differentiation. Ensure that Quality, Selection and Service define your product or business.
Examples of price promotions
2 for the price of 1
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