Although most people have experienced some form of sales promotion, many small business owners do not thoroughly consider this component of the promotional mix. Moreover, even those businesses that do utilize sales promotions rarely consider the impact beyond the short term.
The old expression "penny wise, pound foolish" applies to many businesses that misuse this tactic. What seems like a quick panacea, if misused, can lead to long-term damages to profitability and your brand image. For this reason, we recommend considering the following before offering any sales promotion.
Avoid Overdoing Sales:
Although sales are a great way to increase customer relations, customers can quickly adapt to lower prices. Consequently, the original time-sensitive discount has now become the expected price. Macy's is an excellent example of this shift in customer expectations. Not only does Macy's sell designer clothing for less, but they consistently send out coupon codes, online offers, and in-store discounts. As a result, customers do not categorize Macy's as a luxury brand because of the overuse of sales.
Try Matching Your Brand:
Discounts may sound appealing to a strategic buyer; however, they can have the opposite effect on a luxury buyer. It is rare to see high-end brands like Rolex or Tesla having a sale because it cheapens their brand identity; hence luxury brands must maintain their exclusivity by limiting their promotions. Luxury brands don't necessarily have better quality products, but their pricing strategy has convinced consumers to believe they sell lavish items.
How to Debut a New Product:
Giveaways are common when promoting a new product on social media. Companies offer prizes to customers who tag a certain number of followers in the comments sections or like several posts. Giveaways will ultimately increase your brand's exposure while also providing one lucky customer with an exclusive gift. If your company would instead go the more traditional route, offer free samples to customers. This strategy can introduce customers to a new product that they may not have considered purchasing before.
How to Clear Out Your Inventory:
Time-sensitive promotions like BOGOs (buy one, get one free deal) are also a great way to create a sense of urgency when promoting a product. You can use this strategy to get rid of old products without losing much money. For example, this discount is commonly seen in the restaurant industry to ensure that the food they purchased won't go to waste.
How to Promote Everyday Sales:
Promotions don't always have to be time-sensitive. Lifestyle discounts, like those given to senior citizens, students, or veterans, help benefit the quality of life for a target audience. This discount is an effective way to engage customer satisfaction and encourage more purchases. If you have found yourself relating to these sales objectives, then sales promotions could be a great way to increase revenue. When questioning whether to use sales promotion for your company, look at what position the brand holds. If you have any questions regarding sales promotions or the promotional mix, our team of experts would be glad to answer any questions you may have.