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MARKETING STRATEGY

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Glossary

Definition

A promotional strategy consists of the decisions that define a retailer’s promotional policy: which products to promote, how often, by how much, through which channels, and for what purposes (traffic, inventory turnover, customer acquisition, etc.). A coherent promotional strategy balances price image, profitability, and sales momentum.

Why it's important

  • Generate traffic and revenue: Promotions attract customers and boost sales in the short term.
  • Clearing inventory: Products that are in excess stock or at the end of the season require promotions to prevent depreciation.
  • Building a price image: A retailer that never runs promotions is perceived as expensive, while one that runs too many promotions is perceived as low-end. Striking the right balance is key.

A concrete example

A clothing retailer has defined its annual promotional strategy: four key sales events (winter sales, summer sales, Black Friday, and a spring promotion) featuring broad-based discounts (30%–50% off). Between these events, targeted promotions are held each week on 10–15% of the product range (slow-moving items, end-of-line stock). Key Volume Items (KVIs) are never on sale except during the sales periods. Objective: maintain an overall promotion rate of 25% (25% of sales generated through promotions) while preserving a gross margin of 50%. This strategy is reviewed monthly to make adjustments based on actual performance.

Types of Promotions

  • Instant discount: 20% off, €5 off, buy one get one free
  • Discount voucher: a coupon to be used on a future purchase (loyalty program)
  • Bundle deal: set, bundle (jeans + belt at a discounted price)
  • Free gift: included with every purchase
  • Flash sale: a very short-lived promotion (lasting just a few hours) designed to create a sense of urgency
  • Loyalty card: member prices, points earned

Common Mistakes

  • Promoting without a clear goal: Every promotion should serve a specific purpose (traffic, profit margin, inventory). Promoting "just because it's the right time" dilutes its effectiveness.
  • Too high a discount rate: when more than 30–40% of sales are discounted, customers stop buying at full price and profit margins plummet.
  • Uncoordinated promotions: Launching a promotion on a product that the purchasing department has just restocked at full price leads to overstocking and markdowns.

Learn more

  • Research & Data: Price analysis to assess the impact of your past promotions and optimize your future strategy.
  • Solutions: Promotion Management to plan, manage, and measure your promotional campaigns.
  • Tip: Operational pricing to structure your promotional strategy and align your teams.
  • Resources: See our pricing FAQ for more questions about promotions.

Mini FAQ

It depends on the industry and the strategy. In the food sector, 20 to 30% of the product range is on sale each week. In the fashion industry, promotions are focused on sales events and a few key periods. The key is to ensure consistency with your brand positioning.

Compare the incremental revenue—that is, the sales generated by the promotion minus the usual sales—to the cost of the promotion, which is the loss in margin multiplied by the quantity sold. If the gain exceeds the cost, the promotion is effective.

Yes, to drive traffic through flyers, emails, or social media. But be careful not to encourage customers to put off their purchases while waiting for the promotion. You need to strike the right balance.