In this article, let's chat about a Trade Promotion Pricing strategy widely used in any business. If you know how to master it, you can expect nothing but excellent results!
A Free Goods promotion strategy is defined when a company gives merchandise free of charge. It can come as Free Samples, Free Gifts and Buy-One-Get-One-Free (BOGOF) related promotions.
Companies can give free samples to incentivise new consumers to get to know their products. They can also use a BOGOF promotion to boost sales. Studies show that consumers perceive more value in free items rather than percentage discounts even if, mathematically speaking, the cut is more beneficial. Who doesn’t love freebies?
We all agree that discounts can be a complicated task to manage especially if the company has a precarious system or no system at all.
Free Goods may be as simple as a BOGOF promotion, but it can be more complex when encompassing a different combination of requirements to get a product at no charge.
Discount programs such as Free Goods can create administrative challenges across multiple areas like managing sales and accounting processes. This activity when manually executed has a high chance of leading to a loss of sales and revenue.
There are three significant problems that companies face if they can’t precisely manage Free Goods.
A promotion pricing tool is a powerful ally for companies willing to invest in automation and looking for a better solution to manage their business processes. Flintfox’s Trade Revenue Management Suite comes with a Free Goods template feature that can be enabled inside the Trade Agreement.
In three easy steps, you can run your Free Goods promotion!
The system will add a Free Goods pricing line in the pricing tab of the Trade Agreement window.
The system supports simple promotions such as Buy-One-Get-One-Free, as well as Buy 5 Get 1, Buy 10 Get 2 or any other combination. In those scenarios, the user needs to set up the number of merchandise purchased required to qualify for Free Goods.
The system also provides features that can be used for managing more complex Free Goods transactions where a mix of different product combinations is required.
During order entry, the sales rep will be alerted to the availability of a promotional offer such as a free good. The sales rep can manually select the product that will be given at no cost to the client.
This product is displayed in the system as a "reward" and will be added to the invoice. The accounting system will make an account for this item considering the original cost of the product for the company rather than zero value.
In summary, by using a Trade Revenue Management solution to execute your Promotion Pricing needs such as Free Goods, the company won’t lose sales, stocks will clear up, and the operation will comply with financial and accounting transactions. Easy as pie, right?