In this blog, we will talk about how to manage your prices and discounts to generate promotions that encourage your buyers to choose you over your competition.
What are pricing strategies?
Promotional pricing or pricing strategies are used to encourage sales of a product or service by temporarily reducing its price. It can be used for different purposes:
Attraction of leads
Improve short-term cash flow
Increase customer traffic
Move excess inventory
When should you use these strategies?
Normally, these strategies are used by consumer brands, both retailers, suppliers, department stores, although they can also be used by B2B companies.
These strategies can be used in different situations, for example on holidays to attract customers and generate cross-selling, or be used only for certain customer segments to achieve another objective such as: 10% discount to our customers registered in our loyalty program. The best way to know if you need to use any of these strategies is to ask yourself if your product has exhausted all forms of differentiation from its competition. If everything has already been done, you could start using strategies that differentiate it in price.
These strategies are short-term and should not be used at all times, as it could devalue the brand if used excessively and get your customers used to very low prices, causing market prices to drop.
Types of pricing strategies
Pricing by customer segment
With the prices for your customer segments you can create loyalty strategies for your customers: for example, registered, premium, etc. Or even manage different types of prices for key customers.
Discounts for students or seniors
Temporary prices are offers with a start and end time, these are commonly used on holidays or dates created internally to move excess products in the warehouse.
Prices for minimum quantity
With this pricing strategy, you can create simple promotions where the unit price decreases when you buy several products.
Get 1 for $100 and 5 for $450
Get 5 for $300 and 10 for $500
Using promotions in your sales strategy will allow you to compete with market giants and get a short-term cash flow, remember to use it with measure and always looking to achieve an objective for your business.