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Pros & cons of sales promotion

Updated March 23, 2017

Running a sales promotion as a business owner might seem like a natural way to increase sales and improve your bottom line. Sales promotions have the potential to improve relationships with customers as well as your suppliers. These events could also hurt the company's sales at other times of the year.

Function

As a business owner, there are several ways to run a sales promotion. You could potentially advertise in many venues and visibly mark down the prices of everything in your store for a large sale. You could also market only to specific target markets and discount only certain items. You could also send out coupons so that you have some control over who can take advantage of your sale. With any sale, you will essentially be selling a product for less than the original price.

Influence

One of the benefits of using sales promotions is that you can influence customer behaviour. Consumers like the idea of sales, and they believe that it is to their advantage to act quickly. The idea of the sale could influence the customer to make a purchase when they were otherwise not planning on doing so. The thought of missing out on the sale price is disconcerting for many customers. This leads to an increase in sales for many businesses.

Suppliers

Another benefit of running sales promotions is that you can often get help from your suppliers. If you have good relationships with your suppliers, they might pay for some additional advertising to drive traffic to your store. They might set up a special display or give you special pricing on merchandise in order to help increase sales. Your suppliers want you to succeed so that they can keep selling you goods.

Hurt Other Sales

If you get in the habit of running sales promotions, customers will become aware of it. This could then have a negative impact on your sales anytime that you are not running a promotion. Your customers might start waiting until they see that you are having a sale to come in. If they know that they can get a better price at a different time, they might be inclined to hang onto their money.

Image

Depending on what type of business you are, running sales frequently could hurt your image. Some businesses rely on a reputation of quality in the industry to set themselves apart from others. If this is your calling card, running sales could hurt this image. Customers will no longer associate your business with quality, but will instead associate it with bargains. This could negatively impact your ability to make bigger sales with higher margins at other times.

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About the Author

Luke Arthur has been writing professionally since 2004 on a number of different subjects. In addition to writing informative articles, he published a book, "Modern Day Parables," in 2008. Arthur holds a Bachelor of Science in business from Missouri State University.