Retail Promotion Strategies

Question 1

1. According to Grewal D. et al. (2011), exclusive and invitation-only promotions are a new type of sales promotions driven to the consumer using online channels. What are the advantages of using this particular type of brand activation?

Answer 1

Some online retailers offer a limited set of products for limited time periods to select groups of consumers who must subscribe to the site, which are called exclusive promotions. Some allow subscriptions only after the customer has been invited by another subscriber, which creates a sense of exclusiveness. These are called the invitation-only promotions. The offers generally remain available for a limited duration, such as 4 h or until the merchandise sells out.
Advantages:
Recent research suggests consumers value exclusive promotions over inclusive ones
Invitation-only promotions reduce the chance that other consumers will see the offer and form adverse perceptions or begin to expect to find these fashion items at sharp discounts
The sites usually include a comparison of the regular and sale price (i.e., comparative price format). By using reference prices that provide consumers a cue of the quality and value of the merchandise, these online retailers are likely enhancing consumer demand.

Question 2

2. Consumers might differ on their degree of involvement or personal relevance of the products they buy/use/consume. Based on Kim and Han’s (2019) work, what are the limitations of price discounts on consumer response to (fairtrade) products? What is the main takeout of their study that relates to mobile apps and email?

Answer 2

Kim and Han researched the persuasion model (applied to fairtrade products). Customers of fairtrade products are often more-involved: they know the story behind the brand or have more personal relevance when buying the products. Price promotions on this type of products will lead to a decrease in perceived brand credibility for more-involved customers and, therefore, they won’t react the same way to price promotions as less involved customers do.
Managers should be cautious that price discounts do not target more-involved consumers. Price discounts have been shown to improve response for less-involved consumers. Hence, if brand and sales managers aim to expand fairtrade sales by attracting less-involved consumers, Kim and Han suggest sending out personalized sales promotions via mobile apps or email.