10 Ways to Beat Competition: Way 7 – Using Incentives and promotional offers
Incentives are actions aimed at motivating individuals to perform predetermined action(s) or go in certain direction, while promotional offers are activities, mostly free things, aimed at boosting sales for a specified time. Beating competition using ‘incentives and promotion offers’ way is quite different from using media; media focus on passing information and creating brand appeal however, using ‘incentives and promotion offers’ way focuses on inducing customers to patronize by throwing in something enticing other than the product and service.
- Incentives: Incentive is anything that incites or has the tendency to incite patronage. In business competition, incentives play a big role, as it has the power to shift the direction of patronage, especially in a homogenous market. For instance, if all laptops in the market came with pre-installed Windows 10, you can offer the same laptop, the same windows 10 but with anti-virus; note the anti-virus becomes the incentive to influence patronage.
Business Incentives for this article will be divided into two:
- Financial incentive: This is when a business uses money reward to induce patronage. For instance, money back offers; such as buy three get the money for one back. This incites customers to buy more of a particular product at the expense of other products whether direct competition or not.
- Non-financial incentive: Non-financial incentives do not have direct money implication to the customer, example of non-financial incentives include:
Moral incentive: Appealing to the moral side of the customer to buy your product ahead of competitions’; for instance, some business will say, ‘for every of our product you buy $1 goes to the orphanage”. This appeals to customers who fill it is their moral obligation to give to the orphanage, and they go for such product or service ahead of competition.
Natural incentive: this is appealing to the forces of nature such as fear, admiration, excitement, pursuit of truth, control etc., to influence customers’ choice of what to buy. For instance, Benz uses the edge of excellent braking system to sell their cars; the incentive there is fear of accidents as a result of brake failure. Note that claims like this has to be verified by the appropriate body(s).
- Promotional offers: Promotional offers are timed (run within pre-determined time) activities aimed at boosting sales. Promotional offers are often used by businesses to increase sales at special times such as business off season, breaking competition streak, need to boost sales of a new product, introducing new product to the market etc.
Examples of promotional offers available to business includes:
- Promotional Discount: Promotional discount is the percentage, ratio or allowance taken off the actual price of product or service to induce patronage. This is often used at end of the year by most businesses to dispose their products in preparation for the New Year.
- Promotional coupons: Promotional coupon is a ticket redeemed for a financial discount or rebate when purchasing a product. For promotional coupon there is a time frame within which the coupon can be redeemed.
- Promotional freebies: These are promotional giveaways to induce sales within a stated time frame. For example, a photographer came up with this idea of a free Frame for every wedding package purchased by customer between June and August.
- Promotional codes: Promotional codes given to customers, these codes give them access to certain privileges as determined by the business. These are often used by service businesses to give certain services free.
Incentives and promotional offers as a tool is one the traditional tactics in business, however using it as way to beat competition requires you as a business person to study your competition and execute your incentives or promotional offers without eating too much into your profit. For instance, incentive of 1% of your profit would change a whole lot about your sales and little about your profit.
The battle against competition is very strategic because it has everything to do with business survival. Lately, you would have observed the buying off of companies by their direct competition, this is one of the fallouts of competition in business and if I were you, I will begin to take it serious. Stay tuned to what comes next on 10 Ways to Beat Competition way 8.