![\"promotional](\"https:\/\/www.price2spy.com\/blog\/wp-content\/uploads\/2021\/05\/1-of-4marketers-2.png\")
<\/figure>\n<\/div>\n\n\nWhat is promotional pricing?<\/strong><\/h2>\n\n\n\nSales levels are not always the same, so implementing price changes usually has positive effects. One of the most popular solutions is promotional pricing. <\/p>\n\n\n\n
Promotional pricing<\/strong> is a popular pricing method that includes temporarily reducing product prices to achieve higher demand and drive more sales. <\/p>\n\n\n\nYou might think that this pricing method is pretty self-explanatory since promotion can be a synonym for lower prices. But, there\u2019s more to it than just setting the lower price.<\/p>\n\n\n\n
Here\u2019s one free tip – promotional pricing is not successful because of the lower prices, but because of creating a sense of urgency. If businesses do it too often, their customers will expect lower prices all the time. This is their train of thought – \u201cI can not buy this right now. Oh, well, it\u2019s not a problem, they do these promotions all the time, I\u2019ll buy it eventually.\u201d<\/em><\/p>\n\n\n\nThat\u2019s how you\u2019re missing the whole point! When customers think that they have only one opportunity, they\u2019re making faster decisions. <\/p>\n\n\n\n
The fact that 80% of marketers say that they are using this strategy<\/a> shows how popular promotional pricing really is. Research<\/a> also shows that 1 out of 4 marketers says that finding a way to differentiate their business from the competitors is the most challenging part. That\u2019s why promotional prices come in very handy. <\/p>\n\n\n\n![\"differentiation](\"https:\/\/www.price2spy.com\/blog\/wp-content\/uploads\/2021\/05\/1-of-4marketers-1.png\")
<\/figure>\n<\/div>\n\n\nIs there a difference between penetration pricing and promotional pricing?<\/strong><\/h2>\n\n\n\nThose of you who already know something about pricing strategies might ask what is the difference between penetration and promotional pricing. A very good question!<\/p>\n\n\n\n
As you might have noticed, many pricing strategies<\/strong> can be pretty similar, but understanding those small differences is what separates successful businesses from the ones that are not. <\/p>\n\n\n\nBoth promotional and penetration pricing<\/strong> means using lower prices, but that doesn\u2019t make these two methods the same. <\/p>\n\n\n\nPenetration pricing<\/a> is used when entering new markets. It\u2019s not easy to gain market share when you are a newbie, so businesses tend to go for lower prices. On the other hand, promotional pricing usually targets sales of existing products with the intention of increasing them. The aim is the same – creating more interest. But, in order to do so, penetration pricing will focus on creating a customer base, while promotional pricing increases sales when a company already has a market position. <\/p>\n\n\n\nHow does it work?<\/strong><\/h2>\n\n\n\nThis pricing method can be used on different occasions such as:<\/p>\n\n\n\n
\n- Creating a buzz around the launch of a new product<\/li>\n\n\n\n
- Increasing sales that are dropping<\/li>\n\n\n\n
- Rewarding loyal customers<\/a><\/li>\n\n\n\n
- Getting rid of products<\/li>\n<\/ul>\n\n\n\n
Different tactics can be used:<\/p>\n\n\n\n
Buy one get one (BOGO) <\/strong><\/h3>\n\n\n\nIf you are stuck with a lot of inventory, BOGO<\/strong> could be a good solution. But, you need to think about it before implementing it. Usually, there are two types of BOGO – free and a half-one. Customers get frustrated with a half-one BOGO since the deal always discounts the lower price. BOGO-free, therefore, converts much better. Restaurants are usually going for this strategy.<\/p>\n\n\n\n![\"bogo\"](\"https:\/\/www.price2spy.com\/blog\/wp-content\/uploads\/2021\/05\/How-to-Implement-a-Promotional-Pricing-Strategy-the-Right-Way-2.jpeg\")
Image source: InvoiceBerry<\/em><\/a> <\/figcaption><\/figure>\n<\/div>\n\n\nPercentage discounts<\/strong><\/h3>\n\n\n\nPercentage discounts are by far the most popular promotional pricing strategy. Oddly, percentages tend to convert better than flat numbers, even when the math shows that a customer would actually benefit more from such a discount. For example, having a 10% off always converts better than offering $5 off. <\/p>\n\n\n\n
Coupons<\/strong><\/h3>\n\n\n\nCoupons<\/a> are vouchers that hold a certain discount. TackleDirect<\/a>, a company that sells fishing gear, has made an interesting move. They offered coupons to customers who had abandoned a shopping cart. If we know that the average cart abandonment rate is nearly 70%, this is not so illogical anymore, right?<\/p>\n\n\n\nLoyalty programs<\/strong><\/h3>\n\n\n\nIt\u2019s always nice to take the time to appreciate loyal customers. Customers usually have the opportunity to earn points that move them up to different tiers. The higher the tier, the bigger the benefits. However, you want to be careful here. The communication needs to be very clear and understandable. <\/p>\n\n\n\n
\u201c12 points equals 2 dollars, and 20 points will earn you a 40% discount next month!\u201d<\/em><\/p>\n\n\n\nWell, for a customer this kind of offer means a headache and not a discount. No one will take the time to count their points, to count how many points they need in order to earn a discount, and so on. The idea is good, but it needs to be communicated clearly. <\/p>\n\n\n\n
Something like this:<\/p>\n\n\n
\n![\"loyalty](\"https:\/\/www.price2spy.com\/blog\/wp-content\/uploads\/2021\/05\/How-to-Implement-a-Promotional-Pricing-Strategy-the-Right-Way.jpeg\")
Image source: Dunkin\u2019<\/em><\/a> <\/figcaption><\/figure>\n<\/div>\n\n\nSeasonal discounts<\/strong><\/h3>\n\n\n\nSeasonal discounts are also very popular, especially the Black Friday and Cyber Monday<\/a> ones. The same applies to the holiday season or back-to-school promotions.<\/p>\n\n\n\n![\"seasonal](\"https:\/\/www.price2spy.com\/blog\/wp-content\/uploads\/2021\/05\/How-to-Implement-a-Promotional-Pricing-Strategy-the-Right-Way-3.jpeg\")
Image source: Old Navy<\/em><\/a> <\/figcaption><\/figure>\n<\/div>\n\n\nThe advantages and disadvantages of promotional pricing<\/strong><\/h2>\n\n\n\nAs with everything else, promotional pricing comes with its pros and cons. <\/p>\n\n\n\n
Some of the main advantages are:<\/p>\n\n\n\n
\n- A fast increase in sales <\/strong>– many customers are budget-oriented, so they pay attention to sales and discounts<\/li>\n\n\n\n
- Reduce inventory<\/strong> – if some products don\u2019t sell so well and are just taking up space, promotional pricing is a good option<\/li>\n\n\n\n
- Increase customer loyalty<\/strong> – promotions can be understood as a thank-you note to the customers<\/li>\n<\/ul>\n\n\n\n
There are some disadvantages as well:<\/p>\n\n\n\n
\n- It can be difficult to calculate<\/strong> – the company must calculate what discount is the best, how long should it last, what should be included, etc. <\/li>\n\n\n\n
- Customers\u2019 perception of prices<\/strong> – some customers tend to connect lower prices with lower quality, so you need to be careful<\/li>\n\n\n\n
- Price-oriented customers<\/strong> – on the other hand, some customers are only price-oriented when making a purchasing decision. They will buy your product, but that doesn\u2019t mean that they will become regular customers<\/li>\n<\/ul>\n\n\n\n
How to know if your competitors are using promotional prices?<\/strong><\/h2>\n\n\n\nThis pricing strategy is good news for your business, but that means that your competitors most probably think the same. You were going through all this hustle just to differentiate from competitors, and what now? If everyone is offering discounts, how can you stand out?<\/p>\n\n\n\n
First of all, not everyone will offer discounts at the same time, nor will they be the same. But, if you have many competitors, how can you possibly follow all those changes? You don\u2019t have to!<\/p>\n\n\n\n
Price monitoring tools, such as Price2Spy<\/a> are a perfect solution in these kinds of situations. Price2Spy is able to capture promotional prices and help you to analyze them. Besides capturing promotional prices, you will be able to see other useful details<\/a> such as:<\/p>\n\n\n\n\n- Number of URLs on promotion<\/li>\n\n\n\n
- Promotion text<\/li>\n\n\n\n
- Shelf price<\/li>\n<\/ul>\n\n\n
You might think that this pricing method is pretty self-explanatory since promotion can be a synonym for lower prices. But, there\u2019s more to it than just setting the lower price.<\/p>\n\n\n\n
Here\u2019s one free tip – promotional pricing is not successful because of the lower prices, but because of creating a sense of urgency. If businesses do it too often, their customers will expect lower prices all the time. This is their train of thought – \u201cI can not buy this right now. Oh, well, it\u2019s not a problem, they do these promotions all the time, I\u2019ll buy it eventually.\u201d<\/em><\/p>\n\n\n\n That\u2019s how you\u2019re missing the whole point! When customers think that they have only one opportunity, they\u2019re making faster decisions. <\/p>\n\n\n\n The fact that 80% of marketers say that they are using this strategy<\/a> shows how popular promotional pricing really is. Research<\/a> also shows that 1 out of 4 marketers says that finding a way to differentiate their business from the competitors is the most challenging part. That\u2019s why promotional prices come in very handy. <\/p>\n\n\n Those of you who already know something about pricing strategies might ask what is the difference between penetration and promotional pricing. A very good question!<\/p>\n\n\n\n As you might have noticed, many pricing strategies<\/strong> can be pretty similar, but understanding those small differences is what separates successful businesses from the ones that are not. <\/p>\n\n\n\n Both promotional and penetration pricing<\/strong> means using lower prices, but that doesn\u2019t make these two methods the same. <\/p>\n\n\n\n Penetration pricing<\/a> is used when entering new markets. It\u2019s not easy to gain market share when you are a newbie, so businesses tend to go for lower prices. On the other hand, promotional pricing usually targets sales of existing products with the intention of increasing them. The aim is the same – creating more interest. But, in order to do so, penetration pricing will focus on creating a customer base, while promotional pricing increases sales when a company already has a market position. <\/p>\n\n\n\n This pricing method can be used on different occasions such as:<\/p>\n\n\n\n Different tactics can be used:<\/p>\n\n\n\n If you are stuck with a lot of inventory, BOGO<\/strong> could be a good solution. But, you need to think about it before implementing it. Usually, there are two types of BOGO – free and a half-one. Customers get frustrated with a half-one BOGO since the deal always discounts the lower price. BOGO-free, therefore, converts much better. Restaurants are usually going for this strategy.<\/p>\n\n\n Percentage discounts are by far the most popular promotional pricing strategy. Oddly, percentages tend to convert better than flat numbers, even when the math shows that a customer would actually benefit more from such a discount. For example, having a 10% off always converts better than offering $5 off. <\/p>\n\n\n\n Coupons<\/a> are vouchers that hold a certain discount. TackleDirect<\/a>, a company that sells fishing gear, has made an interesting move. They offered coupons to customers who had abandoned a shopping cart. If we know that the average cart abandonment rate is nearly 70%, this is not so illogical anymore, right?<\/p>\n\n\n\n It\u2019s always nice to take the time to appreciate loyal customers. Customers usually have the opportunity to earn points that move them up to different tiers. The higher the tier, the bigger the benefits. However, you want to be careful here. The communication needs to be very clear and understandable. <\/p>\n\n\n\n \u201c12 points equals 2 dollars, and 20 points will earn you a 40% discount next month!\u201d<\/em><\/p>\n\n\n\n Well, for a customer this kind of offer means a headache and not a discount. No one will take the time to count their points, to count how many points they need in order to earn a discount, and so on. The idea is good, but it needs to be communicated clearly. <\/p>\n\n\n\n Something like this:<\/p>\n\n\n Seasonal discounts are also very popular, especially the Black Friday and Cyber Monday<\/a> ones. The same applies to the holiday season or back-to-school promotions.<\/p>\n\n\n As with everything else, promotional pricing comes with its pros and cons. <\/p>\n\n\n\n Some of the main advantages are:<\/p>\n\n\n\n There are some disadvantages as well:<\/p>\n\n\n\n This pricing strategy is good news for your business, but that means that your competitors most probably think the same. You were going through all this hustle just to differentiate from competitors, and what now? If everyone is offering discounts, how can you stand out?<\/p>\n\n\n\n First of all, not everyone will offer discounts at the same time, nor will they be the same. But, if you have many competitors, how can you possibly follow all those changes? You don\u2019t have to!<\/p>\n\n\n\n Price monitoring tools, such as Price2Spy<\/a> are a perfect solution in these kinds of situations. Price2Spy is able to capture promotional prices and help you to analyze them. Besides capturing promotional prices, you will be able to see other useful details<\/a> such as:<\/p>\n\n\n\n<\/figure>\n<\/div>\n\n\nIs there a difference between penetration pricing and promotional pricing?<\/strong><\/h2>\n\n\n\n
How does it work?<\/strong><\/h2>\n\n\n\n
\n
Buy one get one (BOGO) <\/strong><\/h3>\n\n\n\n
Percentage discounts<\/strong><\/h3>\n\n\n\n
Coupons<\/strong><\/h3>\n\n\n\n
Loyalty programs<\/strong><\/h3>\n\n\n\n
Seasonal discounts<\/strong><\/h3>\n\n\n\n
The advantages and disadvantages of promotional pricing<\/strong><\/h2>\n\n\n\n
\n
\n
How to know if your competitors are using promotional prices?<\/strong><\/h2>\n\n\n\n
\n
![\"product](\"https:\/\/www.price2spy.com\/blog\/wp-content\/uploads\/2021\/05\/image-16-1.png\")
<\/figure>\n<\/div>\n\n\n![\"price](\"https:\/\/www.price2spy.com\/blog\/wp-content\/uploads\/2021\/05\/2021-05-13_14h34_22.png\")
<\/figure>\n<\/div>\n\n\n