Think about how many times you see advertisements for sales or discounts during the course of a typical day. Everywhere you look, retailers and manufacturers are advertising amazing deals on products that you just can’t live without. From coupons and promo codes to time-limited sales, companies of all sizes regularly offer significant discounts on items that they carry.
Even though this seems like a normal part of doing business, have you ever stopped to wonder why companies offer promotions or discounts? As it turns out, there are quite a few reasons.
For many businesses, the goal of offering a discount is to attract new customers. Most people are creatures of habit. They typically have several stores that they shop at consistently, meaning that they are unlikely to branch out and try other stores unless there is a compelling reason for them to do so. This is where promotions and discounts come into the picture.
If a company is offering a really great price on a product, people most likely will take advantage of the deal. This is good news for the store offering the product since it helps them connect with new customers. Once people have completed one purchase with a company, they are likely to come back and make more purchases again in the future. Even if only a small percentage of the people who take advantage of the promotion turn into long-term customers, it is usually worth it for the business.
Discounts and promotions also provide businesses with a way to clear out excess inventory. For instance, if the store owner ordered too many of a certain product, they can use a promotion to clear out all of the extras, freeing up space in their warehouse or storeroom. Products that are discontinued or that are no longer in season can also be cleared out through the use of sales.
Some companies use promotions as a way of changing the way that people perceive their business. For instance, a company might offer a significant discount to members of the military. Not only does this give the store a chance to show military personnel how much they appreciate their service but it also helps improve their reputation. People are more likely to support businesses that go out of their way to do good things for others.
Promotions can also be a good way to increase sales across the board. In most cases, people don’t just buy the item that is on sale. Instead, they throw a few other items in their cart, as well. That means that the store can sell multiple items at full price simply by discounting one item that they carry.
Companies offer promotions and discounts for a lot of different reasons. In some cases, they are trying to attract new customers. In other cases, they are showing their appreciation for a specific segment of the community, trying to improve their reputation, clearing out excess inventory, or hoping that people will buy other products along with the discounted item.