In the first part of our article on efficient Promotion methods, we discussed the price-based tactics of sales promotions.
One should say that these methods are effective only in the short run. In contrast, non-pricing methods can bring a long-lasting positive effect. So, let’s consider those approaches and find out what are the main pros and cons of each of them.
This method refers to free distribution of product samples. Traditional channels of the sample distribution are the following:
- magazines with samples attached to advertisings;
- mini-samples attached to related products (for example, washing powder comes with a test bottle of conditioner);
- hand to hand distribution in public places.
There are several varieties of sampling:
HORECA – sampling of alcohol and tobacco products in bars, restaurants, and other specialized places.
Wet Sampling or Tasting – an offer to buyers to get acquainted with the taste of food products directly near the point of sale.
Dry Sampling – a promoter tells customers about the parameters of a product and then hands out packaged samples. This type of sampling is usually used to promote perfume products, household chemicals, and personal hygiene products.
Pack Swap – exchange of incomplete or almost empty packages of old goods for full packs of an advertised product.
Sampling and its varieties are widely used by such companies as Chanel, Dior, Garnier, Nivea, and others. In addition to perfume companies, some other industries also resort to this method from time to time. For example, in 2011, the Gordon Grade Coffee Company in Mid-Manhattan distributed two thousand portions of its premium-class coffee for free as samples.
So, what are the main advantages of the sampling method?
Ease of Purchase
By testing the samples of your products, customers are inclined to make an immediate purchase.
If your location for sample distribution is far from competitors, the customers’ attention to your brand will not be distracted by other brands.
Accurate Sales Tracking
Sampling at the points of sale allows vendors to easily track the number of purchases made, so purchase reports contain accurate data.
There is the flip side of the coin. Let’s consider the main cons of the sampling method.
Limited Number of Visitors
The location of sample distribution directly influences the number of possible visitors. Moreover, the number of visitors depends on the specific day and time of the presentation. Therefore, in addition to choosing the right place of presentation, you need to choose the right date when the number of visitors is expected to be high.
Limitations in Activities
Your promotional activities can be restricted depending on the place where you conduct them – in front or inside of the location of sample presentation. Let’s suppose that you conduct your promotion in a shopping mall. In this case, the sound system of the mall can prevent customers from hearing your promotion. To avoid this, you may negotiate the sound issue with the mall’s administration in advance or think about a quieter location for your presentation.
Space inside the location of promotion can limit the size of your set-up. For example, space in parking lots is initially reserved for consumers and therefore limits the size of setups for potential promotions. Thus, consider the place for promotion that corresponds to your space needs.
Cross-promotion involves the organization of a joint action to stimulate sales made by several companies. In the context of ecommerce, this method relates to the promotion of a brand or a product on the partner side.
To make a cross-promotion effective, companies should:
- have a common target audience;
- work in the same price segment;
- not compete with each other;
- have the same interest in active sales.
One of the examples of cross-promotions is a joint advertising of the Visa and Mastercard companies of debit, credit, and reward cards.
What are the major benefits this method brings to businesses?
The Opportunity to Cut Costs
According to this method, companies promote products or services by combining their advertising budgets. Thus, they can save at least about 50% of the money.
Expanding Customer Base
Cross-promotion allows businesses to double the number of potential buyers, as in this case, partners recommend each other to their customers.
Accelerated Market Penetration
Cross-promotion is an ideal option for start-ups, as the cooperation with well-known firms helps them to win the trust of customers.
With the benefits of this method, come its costs.
Cross-promotion Can Be not Equally Beneficial
Cross-promotion may imply a partnership on mutually beneficial terms or it may not. In fact, using this method might well mean that you are too focused on promoting someone else’s products while neglecting your own interests. So, always remember that cross-promotion should bring benefits to both parties and plan your promotional activities accordingly.
A gift card is a certificate that gives a customer the right to get an item (or items) or to make a purchase for the sum indicated in it. Usually, Gift Cards are used by customers when they need to make a gift but do not know what to give to a person. Such web stores as iTunes, Walmart, and the like that sell gift certificates as a separate product definitely attract more attention to their products and, thus, increase their profits.
The Right Present
For many people, a gift card is an excellent alternative to, say, money. Using this method of sales promotion, vendors allow a customer to choose independently what he or she needs.
Gift Cards Limit Choice
As a rule, gift cards can be exchanged for particular products in a store. So, while money gives customers full freedom of choice, gift cards limit this freedom. Therefore, thoroughly consider which items should be included in your gift cards to encourage customers to use them. Perhaps, you should include in gift cards your recent bestsellers the demand for which has fallen.
Limited Validity Period
Having received a gift certificate, customers have to rush to make a purchase in a store. It is explained by the fact that sometimes gift cards may impose limited validity periods.
Upselling and Cross-selling
The upselling method is aimed to stimulate sales of more expensive or upgraded products compared to the current selection. The strategy suggests placing expensive goods next to the cheap ones. The task of a vendor here is to demonstrate all the advantages of an expensive product compared to the less expensive ones and convince a buyer that this particular product is an excellent choice.
Cross-selling recommends customers the product upon a bit different basis, e.g. the method features the products that supplement the current choice or add more value to it.
Web stores, such as Magento Marketplace, Amazon, and others, use this method on their sites in the form of the following recommendations on product pages:
- people who bought this also bought;
- people who viewed this also viewed;
- expert recommendations;
- featured products;
- buyers’ choice, etc.
Gaining Customers’ Trust
Upselling and cross-selling enable businesses to build deeper relationships with customers. In fact, this method helps customers to ‘win’, as you offer them various premiums, add-ons, and extra features delivering more value and making them feel like they got the better deal in your store. The satisfaction of a customer results in additional revenues for your business.
Increasing Customer Returning
When you offer a product to a customer, you suggest the solution to his or her problems. This contributes to building customer loyalty and makes them come back to your store.
Products May not Correspond to Customer’s Needs
If you offer an upsell or cross-sell, make sure it satisfies the needs of a customer. For example, if a customer is looking for a dandruff shampoo, recommending a standard shampoo won’t work here.
Customers Can be Confused by Upsells
If you offer a full substitute as an upsell, it may be confusing. In this case, a customer is offered with a product that is very similar to the one he or she chose earlier, but the differences between those two products may be not necessarily clear.
Featured Products Can be Ignored
Customers often think that they know best what they need, and if they look for a particular product in your store, they may not pay attention to what you are offering as upsell or cross-sell products.
Additional services also relate to non-pricing methods of sales promotions. Such services include:
- warranty services;
- availability of a service center;
- delivery service;
- installation or dismantling services;
- packaging, etc.
Today, additional services are used by various businesses. One of the examples is the free tickets offering from the Jet Blue air company. According to that offering, there was the mystical People Officer announced to have free tickets to all directions and flights. He was ready to give the tickets to the person who would correctly answer all the questions of his trivia game. In the end, around a dozen of free tickets were handed out to winners.
The major pros and cons of additional services largely coincide with the pros and cons of the methods described earlier. Typically, additional services are welcomed among loyal customers who already trust the brand rather than those who are still learning about it. In general, it’s recommended to use this method in combination with other methods of sales promotions.
We are concluding the discussion on the effective methods of sales promotions. The particular choice of methods depends entirely on your business needs and aspirations. However, it’s better to combine several pricing methods of sales promotions with some non-pricing ones to drive sales more rapidly.
The post 6 Non-price Methods of Sales Promotions: Pros and Cons appeared first on Magento blog — news, tips and analytics.