Once a small business has determined both its business positioning strategy and the size of the promotional budget, specific promotional activities can be selected. Promotion programs provide direct purchase incentives in contrast to most advertising, which provides reasons to buy your product instead of the competing brand.
Admittedly, some types of promotions can be expensive, complicated, difficult to execute, time-consuming, and difficult to administer legally. Many small businesses are local or regional, so some types of promotional activities will be too expensive or inappropriate for the type of goods and services offered. The most important thing is to come up with a promotion that is unique and that sends the right message about your business. And it is critical to monitor the effectiveness of your promotions. If they don't generate results, they aren't worth the time or money you'll spend.
Your gourmet coffee shop ordinarily sells 500 pounds of coffee in an average week. You decide to try a promotion using a coupon, good for 20 percent off the price of coffee purchased during a particular week.
If coffee sales increase enough so that the additional sales make up for the lower profit margin, coupons might be a good approach. But if you only sell the same 500 or so pounds to your regular customers, then all the coupons are doing is reducing your profit without providing a reasonable benefit.
Typical promotional activities: