Promotion: Point of Sale Methods (OCR GCSE Business)
Revision Note
Written by: Lisa Eades
Reviewed by: Steve Vorster
Point of Sale Promotion Methods
Businesses also have a range of point of sale promotional methods they can use to persuade customers and raise awareness of their products
Point of sale methods
Price reductions
Price reductions can include offers such as a percentage off the full price, money off when a certain amount is spent or flash sales, when certain items are reduced in price for a limited time
Benefits of price reductions include:
They can persuade new customers to try out a product with less financial risk
Businesses commonly reduce prices on a seasonal basis to clear unsold inventory
E.g. January sales allow many retail businesses to sell old stock, while Black Friday creates interest in selected product ranges
Drawbacks of price reductions include:
A lower level of revenue per item is generated
Frequent price reductions may mean that customers are less willing to pay full prices for products
Price reductions may need to be publicised using advertising, which can incur increased costs
Loss leaders
A loss leader is where a business sells one or a small number of items at a loss in order to attract customers to a store
Supermarkets often sell everyday staple products like bananas, milk and eggs as loss leader items to entice customers to their ranges of branded products
In doing so, the business hopes to sell other, full-priced products to customers during their visit, ensuring they make a profit
Increasingly price-aware consumers shop around, making the most of loss leaders in different retail outlets
Competitions
Offering customers the chance to win a valuable prize can be an effective way to attract attention to a business or product
E.g. UK newspaper Daily Mail is well-known for its regular competition to win a dream house
Entry into prize draws is often linked to customer purchases, though many competitions allow anyone to enter, as it raises their profile
Strict rules govern the way prize draws must be conducted, such as including terms and conditions
Free samples
Providing small quantities of a product without charge to customers allows them to try it out before they buy
E.g. Free samples of perfume or cosmetics are often provided in magazines or in departments stores
Supermarkets or delicatessens sometimes provide free samples of new food or drink brands, on behalf of manufacturers, for customers to taste before purchasing
Examiner Tips and Tricks
You may be asked to recommend suitable point of sale promotional activities for a business. You should carefully weigh up the cost or promotions, as well as the suitability for the intended product. Price promotions may be inappropriate for luxury goods, for example.
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