The Better Price of a Sales Promotion
Completion requirements
Lesson 2: Pricing - The Better Price of a Sales Promotion
Constructing Knowledge
With all of the promotions that company executives use to entice shoppers to buy from their stores, it is important to be able to calculate the final price for each promotion. Once you are able to do the calculations, you will be able to compare promotions and determine the better price.
However, the better price is just one of the factors involved in making a purchase. The other major factor is the quality of the product being purchased. Often, consumers need to find a balance between the price and the quality of the product they are looking to buy.
Buy one, get one free (BOGO): This promotion means that when you buy one product, you will receive a second product for free. The free product has to be of equal or lesser value than the product being purchased.
Buy one, get one 50% off: This promotion means that when you buy one product, the second product will have a 50% discount applied to it. The second product has to be of equal or lesser value than the first product. The discount percentage can change, depending upon the promotion.
Sales: Companies will list sale percentages, which are typically anywhere from 10%-75%. Typically company executives will advertise the upper percentage of their sale (ex. 60% off selected products) to entice customers to enter their store. This is the most popular promotional technique.
However, the better price is just one of the factors involved in making a purchase. The other major factor is the quality of the product being purchased. Often, consumers need to find a balance between the price and the quality of the product they are looking to buy.
Types of Promotions
Buy one, get one free (BOGO): This promotion means that when you buy one product, you will receive a second product for free. The free product has to be of equal or lesser value than the product being purchased.
Buy one, get one 50% off: This promotion means that when you buy one product, the second product will have a 50% discount applied to it. The second product has to be of equal or lesser value than the first product. The discount percentage can change, depending upon the promotion.
Sales: Companies will list sale percentages, which are typically anywhere from 10%-75%. Typically company executives will advertise the upper percentage of their sale (ex. 60% off selected products) to entice customers to enter their store. This is the most popular promotional technique.
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No GST sale: This means the store owners will pay the GST for the customer. Essentially, the customer would pay 5% less than they normally would for the product.
Points programs: These promotions are long-term in nature. Company executives will offer points for purchasing from their stores. The points can be exchanged for gift certificates or products when enough points have been accumulated. With this type of program, it is difficult to calculate how much money is saved because of the many different ways the points can be exchanged for gift certificates/products.
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