Sales Promotion and Groupon

How do you define and implement sales promotion strategies? How do you use sales promotion? Do you use sales promotion to create brand awareness, build more foot traffic into the store or to create new sales? If you use sales promotion to create new sales then my next question is . . . how often do your sales promotions include a discounted price? The American Marketing Association defines sales promotion as “the media and nonmedia marketing pressure applied for a predetermined, limited period of time at the level of consumer, retailer, or wholesaler in order to stimulate trial, increase consumer demand, or improve product availability.” Some sales promotions are conducted using featured items, but many times retailers use discounted pricing in sales promotions.

A few months ago one of my students asked me to review a sales promotion media called Groupon. His company was considering using the service. My questions back to the student included: What strategies would the company use Groupon for? Would it be to create new sales using the media to promote discounted price offerings? There could be enough value in Groupon just for that purpose if cash flow is the main issue. However, many other marketing and merchandising managers would be looking to attract and retain customers through the use of Groupon?  I have been tracking offerings on Groupon and have found some luxury offerings. It is interesting how the company will share how many customers took advantage of each offering.

Keep in mind that the media can become the perceived provider of the product. Is it the retailer of Groupon that the customer will recall? While Groupon is very different from Yellow Pages, the one thing they have in common is the ability to attract very price oriented customers. The challenges for retail jewelers is to present the added value of their offerings and not just a discounted piece of jewelry as a commodity item. The more added value customers perceive the greater the opportunity for retail jewelers to create loyal customers.

Sales promotion can attract potentially loyal customers. The key is to know what sales promotions will attract the right kind of customers. Check out Groupon and confirm for yourself if this sort of sales promotion might complement your own approach to sales promotion. Lastly, before you spend any money on any media- know how you are going to evaluate performance.