Promotions and discounts are a strategy of marketing to drive sales and increase revenue. The idea is allowing the client to buy a product for a lower price or receiving some advantage in the transaction, such as free shipping or two for one. 

Although they can help your sales, profit, and move your inventory, it must be done in a right way, otherwise it may damage your revenue of that cycle. For instance, you must considerer the right moment, the type of promotion and how to implement them. 

Discounts is not always a good option for a business, but if done in a strategic way it may lead to good results. If applied the wrong way, discounts may damage not only the profit but the image of a company, making it seem less valuable. 

Benefits of Discounts and Promotions

Increase volume of sales 

A good justification for applying discounts is increasing the volume of sales. That means associating the discount to a larger buy. A good strategy here is offering an item related to what the client is purchasing. 

For example, if the client is buying a TV, you may offer a discount if he also buys a Home Theater. This strategy can be applied in two different ways: buy one get one for free or buy one get one with % off. 

This is a particularly good strategy if you have stocks that you want to clear out. Although it’s a good way to move stock, it’s not the best option to see a large increase in the revenue. This leads us to the next benefit. 

Free storage 

If an item stays too long in stock it may suffer from some damage, not only that, but your capital flux will also be stuck because you don’t get back the money invested in that item. If you offer a discount on an item that isn’t selling to much, you increase the possibility of that happening. 

A good strategy here is placing the product you want to sell in privileged places in the store. That will catch the consumers attention and probably fasten the bought. Getting rid of items sitting in storage will open space for new products. 

In a context of growing market and fast changes in products, storage prices are something to be aware about. Reducing inventory levels will save on costs and minimize loss. 

So, applying discounts to items that are a long time on storage is a good way to free space, minimize loss and optimize profit. 

Make customers loyal and brand awareness  

Usually, people prefer to buy things on sale.  So, from the start discounts will make people more aware of your business. This will attract more clients and make old ones come back. 

Loyal clients tend to prioritize stores that they like. They are more likely to offer good feedback and spend on items on your store. Offering special discounts to loyal clients is a good way to build a relationship with the client and make sure he’ll come back. 

This process alone will drive your brand reputation. Loyal clients will spread the word about your business and make the shape the market perception about your brand. Offering discounts earn the customers trust and boost your brand awareness. 

Types of Promotions 

As said previously, you not only need to define the proper moment to make a promotion but also define what’s the best option for that moment. There are several promotions possible to choose from, among them: 

  • Percentage discounts: you offer a percentage of price off. That’s one of the highest converting promotions. 
  • Numbers off: it works just like the percentage discount, but instead you offer a solid number. 
  • BOGO – Buy One Get One: this promotion consists in buying one and getting another one of the products or something else chosen by the client. 
  • Multi-buys: the multi-buys offer multiple items by the price of only one. It’s a good option to clear inventory. 
  • Multi-save: this promotion consists in buy and save off the entire sale or spend and save off the entire sale.
  • Free shipping: offers free delivery if the client buys a certain amount of item or a certain value. 
  • Try before you buy: it let’s the customer uses the item before he decides to buy or not. 
  • Gift with Purchase: customers get a free gift for a specific purchase. 

So, when to offer a promotion? 

A good way to start thinking about a strategic promotion is considering not directly the type of promotion, but instead, what you want to achieve with that discount or promotion. 

So, you must identify your objectives before start planning on how to conduct the promotion. You need to increase the sales? To empty stock? To generate brand awareness. 

This answer will be a good first step on deciding which kind of promotion you should do and the right moment to do it. But another thing that must be kept in mind when setting a promotion is that it should be a strategic tool. 

It shouldn’t be seen simply as a way of negotiating with the client or a way to exchange. If the discount is given after the client asks for it, it will prejudice the brand and will make customers less trustable in your prices. 

You must know how the movement of your store is during a cycle and then plan the promotion, for example, to the times when you have less public, this will help increase the sales in the low moments. 

In conclusion, the best way to define a promotion strategy is getting to know your incomes and revenue and analyze trough the data you have what’s the moment your profit is down. Then you can have better sales and create promotions that will attract clients. 

With Supply Brain platform, you are able to analyze your demand, simulate scenarios, identify your ideal price, and know the right time to make a promotion. Schedule a demonstration!

    Carol Gameleira

    Carol Gameleira

    Graduated in Public Relations and post graduated in Marketing by ESPM, Carol possess 7 years of experience in the area of Comunications and Digital Marketing, acting in the Artificial Inteligence and Supply Chain realm since 2020.