OCR GCSE Business A291

Sales promotion methods

Lesson Objectives

• To be able to recommend and justify a suitable promotional strategy for Abdul to use if his bike shop were to open in your area.

• To be able to explain how and why Abdul might change the promotional strategy over time.

Complete the worksheet – notes will help when writing up investigation 2

Starter

• What products have you seen recently that you would like to buy?

• If the business made that product cheaper, or gave you something free with it are you MORE likely to buy it?

Sales promotions mindmap

Sales promotions

BOGOF Free samples

Competitions

Events

Price

reductions Coupons

Free gifts

Extra % free

Loyalty

cards

BOGOF BOGOF means buy one get one free and is where a business offers one item free when one is bought. This is to encourage customers to go into the shop or buy the item. Advantages; simple to organise, attracts lots of customers Disadvantages; loss of profit as business is giving away products for free

Would this be suitable for

Abdul’s cycle shop?

Extra % free

Offering an extra % free is where a business offers extra of the product. Advantages; Useful if it is a manufacturing business, also cheap and simple to organise, very popular way to increase sales or market share Disadvantages; Not suitable for some types of products – like a car where it is difficult to increase the %

Would this be suitable for

Abdul’s cycles?

Free samples Free samples is where a business may send out or give customers free samples in order to persuade them to try the product for the first time. Advantages; •Ideal for new products and encourages customers to try products Disadvantages; •Can be expensive sending out samples in the post •Only suitable for some products, can’t offer a sample car for example Would this be

suitable for Abdul’s cycle

business?

Free gift

A free gift is a promotional method of encouraging customers to make the purchase decision that they may have been putting off. If they see the offer they may decide to act before its too late and they miss out. Advantages; good for encouraging customers to act and may help the reputation of the business Disadvantages; very expensive and eats into profit as the business is giving away products for free, the customer may have bought the item anyway even without the free gift.

Would this be suitable for

Abdul’s cycles?

competitions

A competition is where a business offers a prize to promote a product or a business. For example customers are encouraged to come back into the shop to post an entry form: Advantages; Encourages repeat business and builds brand awareness Disadvantage: The business will need to offer a prize which will have to be paid for, customers may visit shop and not know about the competition

Would this be suitable for

Abdul’s cycles?

Coupons and vouchers

Coupons and vouchers are a promotional method where a business will give out printed coupons to encourage a customer to come back to the shop to purchase the discounted item. The hope is that the customer will spend more when they are there. Advantages; •Encourages repeat business •Easy to print •Can be printed out from a website with a QR code on it •Can be linked to an ad campaign in a newspaper •Disadvantages; •Loss of profit

Would this be suitable for

Abdul’s cycle shop?

See Cadence sport website e-voucher here

Events This is where a business runs an event to persuade customers to buy a product or go to a place when sales are normally low. Example is Scarefest at Alton Towers which is held in October when it’s cold and wet! Advantages; •Encourages customers to keep buying •Boosts sales in slow times Disadvantages; •Expensive •Complex to organise •Needs other advertising to promote it

Would this be suitable for

Abdul’s cycle business?

Loyalty cards

This is where a business gives a customer a card to either collect points or stamps. Advantages; This is to encourage repeat business and is a cheap and easy method of sales promotion. Most suitable for anything purchased on a regular basis like coffee or car washes Disadvantages; No good for expensive items

Would this be suitable for

Abdul’s cycles?

AIDA

Abdul will need to grab the attention of prospective customers. What promotional methods can he use to do this in his business?

Abdul will need to develop interest in his products. What suggestions do you have for him?

Abdul will need to try and develop desire within the customers to own some of his expensive cycles. How can he do this?

Abdul needs to drive his customers into the action of buying. An expensive cycle may require some thought and research so Abdul needs to make customers buy from him before they change their mind. How can he do this?

Change over time

When his business first starts up…

• Abdul will need to grab the customers’….

• He could do this by having some shop opening promotional events – Competitions

– Discounts

– Flyers

– Vouchers

If his opening is grand

enough it may make the local paper

When his business is growing…

• Abdul will need to keep his customers’

• Abdul can use reminder advertising to keep customers

• Good customer service – Loyalty discounts

– Run a cycling club

– Sponsor a local team

When his business is well established…

• Abdul will have to make sure that he keeps his customers’

• He also needs to make sure that his customers still take

• Hold a Sale

• Advertise

• Appear at local shows

• Competitions

• Hold events

Quiz

1. What does AIDA stand for?

2. How will Abdul’s promotional strategy change over time?

3. Can you recommend and justify a suitable promotional strategy for Abdul to use if his bike shop were to open in your area?