Promotion: Point of Sale Methods (OCR GCSE Business)

Revision Note

Lisa Eades

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 promotion methods include price reductions, loss leaders, competitions and free samples
Point of sale promotion methods include price reductions, loss leaders, competitions and free samples

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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Lisa Eades

Author: Lisa Eades

Expertise: Business Content Creator

Lisa has taught A Level, GCSE, BTEC and IBDP Business for over 20 years and is a senior Examiner for Edexcel. Lisa has been a successful Head of Department in Kent and has offered private Business tuition to students across the UK. Lisa loves to create imaginative and accessible resources which engage learners and build their passion for the subject.

Steve Vorster

Author: Steve Vorster

Expertise: Economics & Business Subject Lead

Steve has taught A Level, GCSE, IGCSE Business and Economics - as well as IBDP Economics and Business Management. He is an IBDP Examiner and IGCSE textbook author. His students regularly achieve 90-100% in their final exams. Steve has been the Assistant Head of Sixth Form for a school in Devon, and Head of Economics at the world's largest International school in Singapore. He loves to create resources which speed up student learning and are easily accessible by all.