What Are the Main Pros and Cons of Each of the 3 Promotions Being Considered?

Name: Komal Dilshad

SU ID: 853838435 

Q1. What are the main pros and cons of each of the 3 promotions being considered?

1. 3 for 2

Advantages

1. Can stimulate quick increases in sales by targeting promotional incentives on particular products

2. Good short term tactical tool

3. Good method to attract new consumers

4. Could be used to get rid of overstocked, low selling or out of season items

5. It is a good method to introduce a new product to the market.

Disadvantages

1. If used over the long-term, customers may get used to the effect

2. May not ensure repeat purchases

3. May decrease brand value in the longer run.

1. Gift with Purchase

Advantages

1. Helpful in increasing brand awareness
2. Will create word of mouth opportunities and generate referrals
3. Improve the brand image and perception
4. Effective to lure new customers, but slightly less effective than the 3 for 2 strategy.

Disadvantages

1. May generate a purchase cycle where consumers weight for the free gift to buy the product instead of following their regular purchase item.
2. May lessen the perceived value or quality of the item being offered,
3. Potential negative impact on brand image by making you look cheap

1. 50p Coupon

Advantages

1. May result in quick infusion of cash.

2. Encourage first time trial

3. May encourage brand switching or attract first time buyers.

4. Some coupons are never redeemed, so you get some of the awareness building effect for free.

Disadvantages

1. Can be costly in the long run

2. May not be sustainable as a promotional strategy

3. Could lead to Cannibalization of existing revenue

4. May lessen the perceived value or quality of the item being offered,

5. Potential negative impact on brand image by making you look cheap

2. What are the financial implications of the 1st alternative: the “3-for-2” offer?

You would first calculate the sales you could get during a non promotional month, then calculate sales for the promotional month, find the break even point and then find out how the promotion would effect the sales after the promotional month is over.

Price of Gel: 2.99

Price of Shampoo: 3.99

Price of Conditioner: 3.99

On a Normal Day

Typical Days Sales: 100 units each