Taking 25 percent off the price of a good without altering its benefits increases the customer's perception of value. Companies also use sales promotions to achieve other non-revenue-generating objectives.
When a new business launches, for instances, promotions are a way to attract customers away from competitors. A start-up may prioritize establishing a customer base before it focuses on profits. Companies also use sales promotions to clear out excess inventory at the end of a season.
Even when you don't make a profit, generating cash with the unsold items enables you to meet near-term expense obligations and to buy inventory for the next season.
At the very least, you'll be clearing storage space in your store or warehouse that could be costing your money. Sales promotions also enable upselling, where you persuade a customer to buy a more expensive item, and cross-selling, where you sell an associated product to the customer.
For example, you could display some excess t-shirts near a more expensive blazer, and offer the t-shirt free with every blazer sold. Sales can also lead to viral word-of-mouth that expands your customer base further and encourage loyalty among customers. British Airways. Explorations by Collette.
Xanterra Travel Collection. Ascend Hotel Collection. Cambria Hotels. Comfort Inn. Comfort Suites. Econo Lodge.
MainStay Suites. The Oasis at Death Valley. Radisson Collection. Rodeway Inn. Sleep Inn. Suburban Extended Stay Hotel. TripBeat, Endless Vacation. Wyndham Extra Holidays.
Collette Spotlights. Grand Canyon Railway. Vacations By Rail. AARP Travel. Bonefish Grill. Bubba Gump Shrimp Co. Carrabba's Italian Grill. Corner Bakery Cafe.
Outback Steakhouse. AARP Games. Movies for Grownups. Regal Concessions.
Regal Movie Tickets. TV for Grownups. If they have a need for the individual components in the bundle, they typically understand that the total price is lower when the products are purchased as a bundle. As with all business strategies, there will be some trial and error with product bundling.
Typically long-term benefits and better customer relationships develop if customer convenience and value is your motivation. Your business should carefully analyze revenue and profit projections for both unbundled and bundled options. If bundled solutions generate lower profits with no customer advantages, this strategy makes little sense.
All of these factors must be considered in terms of the revenue opportunity and exposure for potential bundle offers. Determine if and how bundling has a place in your store, and develop a marketing plan that will increase value for your customers, referral sources and your organization. Search Search this site.
Operations Advantages of Product Bundle Sales. This Topic Sponsored by. Print Page.
What is product bundling? Business Benefits Bundling is attractive to consumers who benefit from a single, value-oriented purchase of complementary offerings.
Sales promotions can take the form of discounts, percentage-off deals and rebates. They represent short-term incentives used by companies to. Offering discounts on purchases is a way to quickly draw people into your store. Discounts don’t only help your shoppers; they also help your business. From increased sales to improved reputation, discounts may be that one ingredient that can bring business success.
If the product combination is right, the decision to bundle often involves taking these three variables into consideration: Volume: Bundling typically increases unit sales volume. Margins: Bundling can lower the cost of goods sold, and can therefore increase your profit margins.
Exposure: Bundling may offer new marketing channel opportunities or exposure to new potential customers and referral sources. Customer Benefits Customers often prefer to achieve a cluster of satisfactions through one purchase. Keys to Success As with all business strategies, there will be some trial and error with product bundling. Be selective. With the right bundle, everyone can win.
About the Author.