GNVQ Business Unit 5Jane Sanders1 GNVQ BUSINESS Unit 5 Retailing Customer Incentives

GNVQ Business Unit 5Jane Sanders2 Introduction Surveys have been carried out to find out what customers want from particular outlets Retail outlets use a variety of incentives and sales promotion methods to increase sales

GNVQ Business Unit 5Jane Sanders3 Customer Incentives Pricing strategies Discounts Loyalty schemes Sale items Multi-packaging Free offers Credit terms Delivery terms After-sales service

GNVQ Business Unit 5Jane Sanders4 Pricing strategies Cutting prices on selected goods – strategy used by major supermarkets Tesco – Value Campaign Morrisons – Price mission plus Used for goods classed as price sensitive Loss leaders to attract customers in

GNVQ Business Unit 5Jane Sanders5 Other pricing strategies Using odd pricing e.g and not to denote good value Operating promotional zones e.g. baskets of marked down products to attract customers – often situated near the door Sales and marking down to get rid of end of season goods

GNVQ Business Unit 5Jane Sanders6 More common strategies Offering a money-back guarantee if same goods can be found cheaper locally within a time period Promoting new products at a lower introductory price or free trial size – aim to attract customers to buy a new line or to a different type of product – once established prices are raised

GNVQ Business Unit 5Jane Sanders7 And finally ……. Differential pricing – Tesco value goods, Tesco ordinary goods and Tesco Finest goods!

GNVQ Business Unit 5Jane Sanders8 Discounts Prices are fixed in most retail outlets Often available on expensive items, e.g. cars, computers Particularly for cash payment Usually the customer has to request it

GNVQ Business Unit 5Jane Sanders9 Discounts cont./.. Usually offered when a customer spends a large amount on several items Some retailers may offer to throw in extra items rather than give a discount e.g. leads or earphones

GNVQ Business Unit 5Jane Sanders10 Loyalty Schemes Retailers aim is to reward regular shoppers Although monetary benefit to customer is small Companies benefit from the amount of data they have about their regular customers

GNVQ Business Unit 5Jane Sanders11 Retailer benefits By knowing the buying habits of its customers By creating sophisticated databases to allow them to target market particular customers, known as: – Precision retailing – Market basket analysis

GNVQ Business Unit 5Jane Sanders12 Sale Items Non-food retail outlets traditionally hold seasonal sales in January and July to clear out their stock ready for the new season. Generates more business at the quieter times – after Christmas, during summer holiday season

GNVQ Business Unit 5Jane Sanders13 Other reasons for sales to get rid of surplus stock to dispose of damaged or shop- soiled items to promote one particular item for a limited period to increase sales at other quiet times of the year as an incentive to regular customers to sell off stock if relocating or closing down

GNVQ Business Unit 5Jane Sanders14 Trade Descriptions Act 1987 Check what the Act states

GNVQ Business Unit 5Jane Sanders15 Multi-packaging Classic example would be a computer which is often sold with free software and other peripherals to make it more attractive

GNVQ Business Unit 5Jane Sanders16 More Multi-packaging buy two, get a third free free linked products, e.g. free A4 lined paper with lever arch file reduced price offers on linked goods multi-packs

GNVQ Business Unit 5Jane Sanders17 Free offers Promotions which offer items completely free – Usually you have to collect tokens, vouchers or receipts – May have to purchase several other items first

GNVQ Business Unit 5Jane Sanders18 Credit terms Offered to encourage customers to purchase expensive goods Free credit – 0% APR, usually for a set period of time Credit or payment holiday – buy today, pay nothing for 6 months

GNVQ Business Unit 5Jane Sanders19 Delivery terms Larger outlets selling expensive items usually offer a free delivery Stores selling flat-packed, cheaper items usually make a delivery charge Some retail outlets like Next offer mail order Direct service for a small charge Stores need to be flexible about delivery

GNVQ Business Unit 5Jane Sanders20 After-sales service Particularly important for large expensive items like washing machines or cars Offer a maintenance service Offer a service for faulty good

GNVQ Business Unit 5Jane Sanders21 Reference Nuttall, Chris J. Business for Intermediate GNVQ (2 nd Edition) 2000, Harper Collins Plublishers Ltd