Promotion Pricing: How to Boost Customer Loyalty and Market Share

In this article, we describe best practices for promotional pricing for CPG brands, including explaining popular promotional pricing tactics like flash sales and promo codes.

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What is Promotional Pricing?

Promotional pricing is a marketing strategy that can be used to lower the price of a product for a short-term period, with the aim of attracting new customers, increasing sales, or boosting revenue growth.

Promotional pricing can be an effective marketing strategy for CPG brands looking to increase their revenue growth, attract new customers, or boost sales of a particular product. However, it's important to use promotional pricing strategies strategically and not rely on them too heavily. 

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How can promotional pricing boost customer loyalty and market share? 

Promotional pricing is a powerful marketing tool that can help CPG brands attract new customers, increase sales volume, and improve market share. Promotional pricing is often used during short-term promotional periods, such as seasonal sales, to create a sense of urgency and encourage customers to buy products at a reduced price. 

Here are some examples of how CPG brands can use promotional pricing to drive growth and success:

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1. Flash Sales: Flash sales are a popular promotional pricing strategy that creates a sense of urgency among customers. By offering a reduced price on a particular product for a limited time, CPG brands can encourage customers to buy the product before the promotion ends. Flash sales can be used to increase sales volume and boost market share, while also creating a sense of excitement and urgency among customers.
2. Buy One, Get One Free (bogof or BOGO): The buy one, get one free (BOGO) promotion is a classic promotional pricing example that is still used today. By offering a free product with the purchase of another product, CPG brands can encourage customers to try new products and increase sales volume. BOGO promotions can also be used to boost customer loyalty by providing a free product as a reward for repeat purchases.‍
3. Price Discount: Price discounts are a simple and effective promotional pricing strategy that can be used to increase sales volume and improve market share. By offering a reduced price on a particular product, CPG brands can encourage customers to buy the product and try it for the first time. Price discounts can also be used to promote sales of particular products or clear out excess inventory.‍
4. Promo Codes: Promo codes are a popular promotional pricing strategy for e-commerce retailers. By offering a special code that customers can enter at checkout for a discount on their purchase, CPG brands can encourage customers to make a purchase and increase sales volume. Promo codes can also be used to track the effectiveness of marketing campaigns and improve ROI for promotional pricing.‍
5. Low Price: This involves offering a product at a lower price than usual to attract new customers and increase sales.‍
6. Seasonal Sales: This involves offering products at a discounted price during particular times of the year, such as during the holiday season.

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What are the advantages of Promotional Pricing?

When used surgically, promotional pricing can be a powerful tool to expand and fortify customer base and to boost sales. Here are some of the benefits of promotional pricing:

1. Attracts New Customers: Promotional pricing can be an effective way to attract new customers who may not have tried your products before.
2. Increases Sales: Promotional pricing can boost sales of particular products, especially during promotional periods.
3. Boosts Revenue Growth: Promotional pricing can lead to increased revenue growth, as customers may buy more products or make repeat purchases.
4. Enhances Brand Loyalty: Promotional pricing can help enhance brand loyalty by providing customers with the opportunity to try new products at a lower price.

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What are the disadvantages of Promotional Pricing?

While promotional pricing can be an effective marketing strategy, it's important to use it strategically and not rely on it too heavily. CPG brands should consider using promotional pricing in combination with other marketing strategies, such as social media and in-store merchandising, to enhance its effectiveness.

Promotional pricing can in fact harm a brand’s financial health, if improperly managed: 

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1. Lower Profit Margins: If not managed correctly, promotional pricing can lead to lower profit margins, as products are sold at a discounted price.
2. Decreases the Value of a Product: Promotional pricing can decrease the perceived value of a product, as customers may see it as lower quality or less valuable than products sold at full price.
3. Attracts Only Deal-Seeking Customers: Promotional pricing may attract only deal-seeking customers who are not loyal to the brand and may not make repeat purchases.

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Trade Promotion Management (TPM) is an essential part of managing business spend for Consumer Packaged Goods (CPG) brands. Managing TPM can be complex, with multiple variables to consider, including pricing, promotions, and in-store merchandising. TPM software provides a solution for managing TPM more effectively, improving results and driving growth.

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Can TPM software track promotional pricing? Why is TPM Software is Important for CPG Brands

Managing trade promotions is a complex process that involves multiple variables, including pricing, promotions, and in-store merchandising. Without the right tools, managing trade promotions can be time-consuming, error-prone, and ineffective. TPM software provides a solution for managing trade promotions more effectively, improving results and driving growth for CPG brands.

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How can Vividly  help manage promotional pricing?

In today's highly competitive market, it's more important than ever for CPG brands to manage their trade promotions effectively. TPM software provides a range of benefits that can help CPG brands achieve their goals, including improved efficiency, better results, increased accuracy, greater ROI, and better trade promotion management. By investing in TPM software, CPG brands can take their trade promotions to the next level, driving sustainable growth and success.

Here are some of the key benefits:

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1. Improved Efficiency: TPM software streamlines the promotion creation and management process, making it faster and more efficient to create, execute, and track promotions. With TPM software, you can manage all of your promotions in one place, making it easier to see the big picture and make data-driven decisions.
2. Seamless Promotion Planning: TPM software allows you to create more effective promotions that resonate with your target audience, increasing engagement and sales. With features like personalization and analytics, you can create promotions that are tailored to the unique needs and preferences of your audience, improving results and driving growth.
3. AI-Powered Forecasting: Fully integrated AI forecasting calculates volume forecasts in real-time, decreasing manual labor and boosting forecast accuracy to 98%. 
4. Increased Accuracy: TPM software helps you manage promotions more accurately, reducing errors and improving compliance. With features like automatic calculations and validation checks, you can ensure that promotions are set up correctly and that retailers are following the rules.
5. Greater ROI: TPM software helps you optimize your spend and improve your return on investment (ROI) for promotions. With features like real-time analytics and campaign management, you can track performance and make data-driven decisions to improve results over time.
6. Better Trade Promotion Management: TPM software provides a comprehensive solution for managing trade promotions, including promotional planning, analytics, and optimization. With TPM software, you can plan and execute more effective trade promotions, optimize your spend, and improve your ROI.

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TPM software is a critical tool for managing trade promotions effectively, and choosing the right software solution can make a significant impact on the results achieved. With TPM software, CPG brands can improve efficiency, accuracy, and ROI, while optimizing trade promotion management. Vividly offers CPG brands a comprehensive solution with personalized promotions, real-time analytics, and trade promotion optimization.

Vividly helps brands like Hint Water, Perfect Snacks, Liquid Death and more improve trade accuracy and boost trade spend ROI. Learn more about how Vividly can help you — schedule a demo today!

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FAQ:

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1. What is promotional pricing? Promotional pricing describes a sales tactic in which brands temporarily drop the price of products in order to generate sales and increase their customer base. 

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2. What are trade promotions? Trade promotions are incentives that brands offer to retailers in order to increase the demand for a brand’s products in stores. 

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3. What is trade promotion management? Trade promotion management (TPM) describes the process by which CPG brands plan, execute and analyze the effectiveness of their trade promotions. Many brands use a Trade Promotion Management system like Vividly to streamline this complicated process and maximize their ROI. 

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4. What are CPG companies? Consumer Packaged Goods (“CPG”) companies are brands that sell goods used daily by average consumers, which must be repurchased frequently. Examples of CPG products include makeup, toilet paper, snack foods, and canned or bottled beverages.

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5. What is ROI? “ROI” stands for “return on investment”. It is a financial term used to describe how profitable an investment is.