Sales discount: Difference between revisions

From CEOpedia | Management online
(The LinkTitles extension automatically added links to existing pages (<a target="_blank" rel="noreferrer noopener" class="external free" href="https://github.com/bovender/LinkTitles">https://github.com/bovender/LinkTitles</a>).)
m (Text cleaning)
 
(4 intermediate revisions by 2 users not shown)
Line 1: Line 1:
{{infobox4
'''Sales discount''' it is one of promotion instrument which gives consumers additional advantage (for instance reduced [[price]], additional unit or sample etc.) in specific, temporary period of time. It is an [[action]] which give [[company]]'s clients incentive to buy [[product]] or [[service]] (R. C. Blattberg, R. Briesch 2010, p. 3). Usually companies use sales discount when they launch a new product and they would like to persuade and entice clients to buying or if some products [[need]] to be sale as fast as possible (J. L. Burrow, A.R. Fowler 2015, p. 446).
|list1=
<ul>
<li>[[Convenience product]]</li>
<li>[[Special offering]]</li>
<li>[[Cross merchandising]]</li>
<li>[[Advantages of online advertising]]</li>
<li>[[Trade discount]]</li>
<li>[[Market Challenger]]</li>
<li>[[Ad view]]</li>
<li>[[Trade allowance]]</li>
<li>[[Limited distribution]]</li>
</ul>
}}
 
 
'''Sales discount''' it is one of promotion instrument which gives consumers additional advantage (for instance reduced [[price]], additional unit or sample etc.) in specific, temporary period of time. It is an [[action]] which give [[company]]'s clients incentive to buy [[product]] or [[service]] (R. C. Blattberg, R. Briesch 2010, s.3). Usually companies use sales discount when they launch a new product and they would like to persuade and entice clients to buying or if some products [[need]] to be sale as fast as possible (J. L. Burrow, A.R. Fowler 2015, s.446).


==Types of Sales Discounts==
==Types of Sales Discounts==
We can distinguish different types of sales discounts (R. C. Blattberg, R. Briesch 2010, s.4-5):
We can distinguish different types of sales discounts (R. C. Blattberg, R. Briesch 2010, p. 4-5):
* '''Price Reduction''' - lower price for specific period of time.
* '''Price Reduction''' - lower price for specific period of time.
* '''Retailer Coupon''' - specific piece of paper which gives clients the right to a discount.  
* '''Retailer Coupon''' - specific piece of paper which gives clients the right to a discount.  
* '''Free Goods''' - consumers get additional product for free. It could be one product more for instance “buy one get one free” or complementary product to main item for example shampoo and shower gel.  
* '''Free Goods''' - consumers get additional product for free. It could be one product more for instance "buy one get one free" or complementary product to main item for example shampoo and shower gel.  
* '''Sweepstakes''' - consumers have a chance to win extra [[money]] or other prizes.  
* '''Sweepstakes''' - consumers have a chance to win extra [[money]] or other prizes.  
* '''Free Trial''' - retailer gives consumers free samples of product to encourage and enhance of buying them.
* '''Free Trial''' - retailer gives consumers free samples of product to encourage and enhance of buying them.
* '''N-for''' - special discount ancillary on amount of product. For instance 3 products in lower price than only one.  
* '''N-for''' - special discount ancillary on amount of product. For instance 3 products in lower price than only one.  
* '''Discount Card''' - special offers with cheaper prices for consumers who have special card.
* '''Discount Card''' - special offers with cheaper prices for consumers who have special card.
* '''Rebates''' - clients get special offer and discount form, after their bought something they mail data and receive some money back.
* '''Rebates''' - clients get [[special offer]] and discount form, after their bought something they mail data and receive some money back.
* '''Bundled Promotion''' - discount only for complementary products for example fries and ketchup.  
* '''Bundled Promotion''' - discount only for complementary products for example fries and ketchup.  


==Advantages and disadvantage of sales discounts==
==Advantages and disadvantage of sales discounts==
Sales discount has both of positive and negative examples. Sometimes sales promotion make a good influence on [[brand]] and sales in general. In other hand it works in opposite way (J. L. Burrow, A.R. Fowler 2015, s.446):
Sales discount has both of positive and negative examples. Sometimes sales promotion make a good influence on [[brand]] and sales in general. In other hand it works in opposite way (J. L. Burrow, A.R. Fowler 2015, p. 446):


'''Advantages:'''
'''Advantages:'''
* Fast growth of sale in specific period of time what should improve [[consumer]] to be loyal.
* Fast growth of sale in specific period of time what should improve [[consumer]] to be loyal.
* Measurement of promotion - in simple way companies can measure how promotion effective was. Shops can count how many coupons distribute and how many products sale to compare it .  
* Measurement of promotion - in simple way companies can measure how promotion effective was. Shops can count how many coupons distribute and how many products sale to compare it .  


'''Disadvantage:'''  
'''Disadvantage:'''  
Line 41: Line 25:


==How promotion affects on sales==
==How promotion affects on sales==
We can distinguish several effects of sales discounts (K. Gedenk, S. A. Neslin, K. Ailawadi, 2010, s.306-307):  
We can distinguish several effects of sales discounts (K. Gedenk, S. A. Neslin, K. Ailawadi, 2010, p. 306-307):  
* '''Brand change''' - this is a kind of short-term effect, customers are encouraged by lower prices, which is why they change the brand of the product.
* '''Brand change''' - this is a kind of short-term effect, customers are encouraged by lower prices, which is why they change the brand of the product.
* '''Product and category switching''' - better offer in store of similar products can improve clients to buy different one and even category.  
* '''Product and category switching''' - better offer in store of similar products can improve clients to buy different one and even category.  
* '''Purchase Acceleration and Stockpiling''' - some clients buy more products with discounts to make some supply to save money. When [[client]] buy regularly one product, will buy it on promotion more because they know that they have to buy it later in higher price.
* '''Purchase Acceleration and Stockpiling''' - some clients buy more products with discounts to make some supply to save money. When [[client]] buy regularly one product, will buy it on promotion more because they know that they have to buy it later in higher price.
* '''Product loyalty''' - some consumer when try to new product because of sales discount stay more loyal for this brand. Unfortunately, sometimes is opposite. Some of them don't buy the same product in higher price because they think it is overpaid.  
* '''Product loyalty''' - some consumer when try to new product because of sales discount stay more loyal for this brand. Unfortunately, sometimes is opposite. Some of them don't buy the same product in higher price because they think it is overpaid.  
Line 55: Line 39:
* Coupon Discounts - Companies often use coupons to offer discounts on their products. Coupons are a great way to entice customers to purchase more products, as they often offer discounts that are larger than cash discounts.
* Coupon Discounts - Companies often use coupons to offer discounts on their products. Coupons are a great way to entice customers to purchase more products, as they often offer discounts that are larger than cash discounts.


==Other approaches related to Sales discount==
{{infobox5|list1={{i5link|a=[[Special offering]]}} &mdash; {{i5link|a=[[Optional product pricing]]}} &mdash; {{i5link|a=[[Coupon book]]}} &mdash; {{i5link|a=[[Prestigious price strategy]]}} &mdash; {{i5link|a=[[Sales and profit growth strategy]]}} &mdash; {{i5link|a=[[Skimming pricing strategy]]}} &mdash; {{i5link|a=[[Trade allowance]]}} &mdash; {{i5link|a=[[Price bundling]]}} &mdash; {{i5link|a=[[Discount pricing]]}} }}
One approach related to sales discounts is to use promotional pricing. Promotional pricing is when a company will temporarily reduce the price of a product in order to increase [[demand]] and encourage customers to purchase the product. This could be a one-time discount or a longer-term promotion. Another approach is to use buy-one-get-one-free offers. This is a popular way to incentivize customers to purchase more of a product. It is often used for products that have a long shelf life, so the company is able to increase sales without having to worry about disposing of any unsold inventory. Other approaches related to sales discounts include using loyalty discounts, offering free [[shipping]], and providing additional incentives or rewards. All of these approaches are intended to increase sales and encourage customers to make purchases. In summary, there are many approaches to using sales discounts to encourage customers to purchase products. Promotional pricing, buy-one-get-one-free offers, loyalty discounts, free shipping, and additional incentives or rewards are all useful ways to increase sales and entice customers to buy.


==References==
==References==
* Ashraf M. G., Rizwan M., (2014) [http://www.macrothink.org/journal/index.php/jpag/article/view/5844/_27''The promotional tools and situational factors impact on consumer buying behaviour and sales promotion''], "Journal of [[Public administration|Public Administration]] and Governance", nr. 2
* Ashraf M. G., Rizwan M., (2014) [http://www.macrothink.org/journal/index.php/jpag/article/view/5844/_27''The promotional tools and situational factors impact on consumer buying behaviour and sales promotion''], "Journal of [[Public administration|Public Administration]] and Governance", nr. 2
* Blattberg R. C., Briesch R.,(2010), [https://www.researchgate.net/publication/256241591_Sales_Promotions ''Sales Promotion''], "Oxford Handbook of Pricing [[Management]]", Oxford University Press, s.3  
* Blattberg R. C., Briesch R.,(2010), [https://www.researchgate.net/publication/256241591_Sales_Promotions ''Sales Promotion''], "Oxford Handbook of Pricing [[Management]]", Oxford University Press, p. 3  
* Burrow J. L., Fowler A.R., (2015), ''[[Marketing]]'', "Cengage Learning", s. 446
* Burrow J. L., Fowler A.R., (2015), ''[[Marketing]]'', "Cengage Learning", p. 446
* Gedenk K., Neslin S. A., Ailawadi K., (2006),''Sales promotion. Retailing in the 21st Century''. "Springer, Berlin, Heidelberg", s.306-307
* Gedenk K., Neslin S. A., Ailawadi K., (2006),''Sales promotion. Retailing in the 21st Century''. "Springer, Berlin, Heidelberg", p. 306-307
* Santini F. (red), (2015), [http://www.scielo.br/pdf/bar/v12n2/1807-7692-bar-12-02-00169.pdf ''Moderating Effects of Sales Promotion Types''], "Brazilian Administration Review", nr. 2
* Santini F. (red), (2015), [http://www.scielo.br/pdf/bar/v12n2/1807-7692-bar-12-02-00169.pdf ''Moderating Effects of Sales Promotion Types''], "Brazilian Administration Review", nr. 2
[[Category:Marketing]]
[[Category:Marketing]]
{{a|Karolina Knapik}}
{{a|Karolina Knapik}}

Latest revision as of 05:08, 18 November 2023

Sales discount it is one of promotion instrument which gives consumers additional advantage (for instance reduced price, additional unit or sample etc.) in specific, temporary period of time. It is an action which give company's clients incentive to buy product or service (R. C. Blattberg, R. Briesch 2010, p. 3). Usually companies use sales discount when they launch a new product and they would like to persuade and entice clients to buying or if some products need to be sale as fast as possible (J. L. Burrow, A.R. Fowler 2015, p. 446).

Types of Sales Discounts

We can distinguish different types of sales discounts (R. C. Blattberg, R. Briesch 2010, p. 4-5):

  • Price Reduction - lower price for specific period of time.
  • Retailer Coupon - specific piece of paper which gives clients the right to a discount.
  • Free Goods - consumers get additional product for free. It could be one product more for instance "buy one get one free" or complementary product to main item for example shampoo and shower gel.
  • Sweepstakes - consumers have a chance to win extra money or other prizes.
  • Free Trial - retailer gives consumers free samples of product to encourage and enhance of buying them.
  • N-for - special discount ancillary on amount of product. For instance 3 products in lower price than only one.
  • Discount Card - special offers with cheaper prices for consumers who have special card.
  • Rebates - clients get special offer and discount form, after their bought something they mail data and receive some money back.
  • Bundled Promotion - discount only for complementary products for example fries and ketchup.

Advantages and disadvantage of sales discounts

Sales discount has both of positive and negative examples. Sometimes sales promotion make a good influence on brand and sales in general. In other hand it works in opposite way (J. L. Burrow, A.R. Fowler 2015, p. 446):

Advantages:

  • Fast growth of sale in specific period of time what should improve consumer to be loyal.
  • Measurement of promotion - in simple way companies can measure how promotion effective was. Shops can count how many coupons distribute and how many products sale to compare it .

Disadvantage:

  • Cost of implementation promotion could overrun profit of sales.
  • Another disadvantage is opposite to first advantage - some clients can lose their loyalty of brand.

How promotion affects on sales

We can distinguish several effects of sales discounts (K. Gedenk, S. A. Neslin, K. Ailawadi, 2010, p. 306-307):

  • Brand change - this is a kind of short-term effect, customers are encouraged by lower prices, which is why they change the brand of the product.
  • Product and category switching - better offer in store of similar products can improve clients to buy different one and even category.
  • Purchase Acceleration and Stockpiling - some clients buy more products with discounts to make some supply to save money. When client buy regularly one product, will buy it on promotion more because they know that they have to buy it later in higher price.
  • Product loyalty - some consumer when try to new product because of sales discount stay more loyal for this brand. Unfortunately, sometimes is opposite. Some of them don't buy the same product in higher price because they think it is overpaid.
  • Additional purchase - sales can by only reason of visiting store then consumer buy another product not only this with discount.

Examples of Sales discount

  • Cash Discounts - Cash discounts are offered to customers who pay their bills early or within a certain amount of time. This type of discount is designed to encourage customers to pay quicker, which helps the company maintain a steady cash flow.
  • Volume Discounts - Companies often offer discounts to customers who purchase large quantities of a product. This is done to incentivize customers to purchase more in order to increase the overall revenue of the company.
  • Loyalty Program Discounts - Loyalty programs are often used by companies to reward customers who spend a certain amount of money with them. These loyalty programs often offer discounts and other perks to loyal customers.
  • Seasonal Discounts - Companies often offer seasonal discounts during certain times of the year. These discounts are designed to increase sales during the slower times of the year.
  • Coupon Discounts - Companies often use coupons to offer discounts on their products. Coupons are a great way to entice customers to purchase more products, as they often offer discounts that are larger than cash discounts.


Sales discountrecommended articles
Special offeringOptional product pricingCoupon bookPrestigious price strategySales and profit growth strategySkimming pricing strategyTrade allowancePrice bundlingDiscount pricing

References

Author: Karolina Knapik