Promotional Pricing Strategy: Definition, Types, Strategy, Examples, and Pros/Cons

What is Promotional Pricing?

Promotional pricing is a savvy sales tactic where companies briefly drop the regular price of a product or service to spark sales. These deals, often advertised through campaigns, aim to attract both existing customers and new buyers.

These reduced prices help companies swiftly move stock, cutting storage expenses and avoiding losses from unsold items nearing expiration. By tagging items with promotional prices lower than usual, companies grant consumers access to products or services at a discount.

When you catch something “on sale,” you’re benefiting from promotional pricing. It’s like a limited-time offer that creates gossip by making people feel they’re getting a great deal. This strategy can lure in shoppers who are keen on good bargains, boosting sales, building customer loyalty, and giving a quick cash flow boost.

Types of Promotional Pricing

There are different ways you can use price promotion in your business. Below are some of the types mentioned:


Discounts are like winning lottery tickets for buyers. They involve reduced prices for buying in bulk or for products nearing their expiration date. Think of it as a supermarket’s end-of-day sale on veggies or ready meals. “Buy one, get one-half price” is a classic example where you get a deal that feels like a 50% discount, though it’s actually 25%. It’s a psychological game that makes us feel like winners.

Flash and Seasonal Sales

Flash sales are like surprise parties that last a few hours, offering sudden discounts. Seasonal sales, on the other hand, are like the holidays – they come around predictably. Amazon’s lightning deals or post-Easter discounted chocolates in stores are examples. Flash sales are like pop-up shops of discounts, while seasonal sales are the annual holiday celebrations.

Loyalty Programs

Loyalty programs are like stamps on a coffee card – the more you buy, the closer you get to a freebie. Businesses use these to keep us coming back. Amazon Prime’s free delivery or exclusive deals for members make us feel special like we’re part of a VIP club.

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Coupons are the secret codes of shopping. They give discounts or perks on specific purchases or totals. Imagine getting 10% off a £50 purchase – it’s a treasure hunt for discounts. They make us feel like smart buyers while giving us a little victory dance at the checkout.

Free Delivery

Free delivery is like a gift from the shopping gods. It’s particularly appealing for furniture or big appliance buyers. You’re not just buying a product; you’re avoiding the hassle of moving it too. It’s the cherry on top that makes the purchase a whole lot sweeter.

Gamified Promotions

Gamified promotions are like turning shopping into a game. Customers participate in lucky draws or give feedback to win discounts. It’s a funfair of discounts where everyone can win something extra. By involving us, they keep us engaged and excited about potential savings.

Read More: Price Lining in Marketing

Advantages and Disadvantages of Promotional Pricing

Let’s explore some pros and cons of promotional pricing strategy in marketing:


Urgency Creation

It’s like a limited-time pizza deal – it makes you crave it now! Promotional pricing creates that same urgency; it nudges shoppers to act fast before the deal disappears like Cinderella’s carriage. It’s the “act now or lose out” magic that boosts sales and gets people excited.

New Customer Magnet

Imagine a store shouting, “New products, crazy discounts!” It’s like a magnet for curious buyers. Promotional pricing grabs the attention of those eyeing a product but hesitating due to the price tag. It’s a welcome mat for newcomers, giving them a taste of the goodies and inviting them in.

Competitive Edge

Think of it as being the only ice cream truck on a hot summer day. Promotional pricing helps businesses stand out among competitors. When everyone’s selling the same stuff, a good discount shines like a beacon, drawing customers away from the competition.

Read More: Sealed Bid Pricing in Marketing

Boost in Revenue

It’s like a sudden rush in a lemonade stand on a scorching day. Lower prices bring in more buyers, which means more sales, even if the profit per item is less. It’s about selling more lemonades to everyone passing by and watching those coins fill up the jar.

Clearing Old Stock

Ever seen last season’s fashion on a clearance rack? That’s the magic of promotional pricing. It helps clear the shelves of old inventory by tempting buyers with great deals. It’s like a cleanup crew for businesses, making space for new and shiny stuff.


Price Perception Juggling

Imagine if your favorite candy suddenly cost double – not cool, right? Well, frequent discounts can mess with how customers see your product’s real value. They might start expecting discounts always, which isn’t great for your brand image.

Read More: Going Rate Pricing Strategy

Loyalty & Trust Trouble

It’s like promising a friend your favorite book and then changing your mind. When customers get used to lower prices, hiking them back up can feel like a broken promise. This can shake their loyalty and trust in your brand.

Confused Customer Base

Imagine a concert where everyone’s got different tickets but paid the same. Frequent promotional pricing strategies can confuse your target audience. They might start chasing discounts rather than the quality of your product, leaving you with a muddled market.

Short-Term Success Trap

Think of it as a sprint that you can’t keep up forever. Promotional pricing might bring a surge in sales, but it’s short-lived. Customers might jump ship the moment another brand offers better discounts, leaving you in a race you can’t win.

Competitor Relationships at Risk

Promotional pricing is like being best buddies with your rival’s sibling. Constant discount battles with competitors might strain relationships in the industry. You’re all in the same boat, and if you start poking holes, everyone might sink.

Read More: Differential Pricing Strategy

Strategies For Promotional Pricing

So far you understand what promotional pricing is and its pros and cons. In addition, uncover its six strategies to win with your promotional prices.

Discount Pricing

It’s the OG of sales strategies. Imagine a tech company slashing prices by 30% on their latest gadgets during a weekend sale. Customers flock in for the irresistible offer, boosting sales and brand visibility.

Bundle Pricing

This is like getting a package deal. Consider a streaming service offering a bundle of movies, music, and exclusive content at a slightly higher but appealing price. Customers get more bang for their buck.

Read More:  4 Cs of Marketing

Loss Leader Strategy

Picture a grocery store selling milk at a loss to get you in the door, hoping you’ll also pick up other items at regular prices. It’s a sacrifice on one item to boost overall sales.

Psychological Pricing

Think of a luxury brand pricing a bag at $999 instead of $1000. That $1 difference might not sway you, but it plays on the psychology of pricing perception, making it seem like a better deal.

Seasonal Discounting

It’s the Black Friday frenzy or the summer clearance sales. Businesses offer discounts during specific seasons or events to capitalize on increased consumer spending and festive moods.

Limited Time Offers

This is like a ticking clock enticing buyers. Picture a clothing store announcing a 24-hour flash sale. The urgency pushes customers to make quick decisions, driving sales within that short window.

Read More: 3 Ps of Marketing Mix

Examples of Promotional Pricing

Let’s further explore how promotional pricing works through the following five examples of different companies:

Amazon Prime Day by Amazon

Amazon Prime Day has mastered the art of creating hype and urgency. With exclusive deals for Prime members and limited-time lightning sales, they capitalize on FOMO (fear of missing out) to drive massive sales. The clever use of countdowns and offers on a wide range of products keeps customers hooked.

McDonald’s Limited Time Offers

McDonald’s consistently rolls out limited-time offers, introducing new menu items or bringing back favorites for a short period. Their McRib sandwich is a prime example. By creating scarcity and anticipation, they drive up demand and attract customers looking for that exclusive experience.

Read More: The 4 Ps of Marketing Mix

Steam Sales by Valve Corporation

Steam, a digital gaming platform, hosts periodic sales, like the Summer Sale or Winter Sale. The discounts on games, sometimes up to 90%, attract gamers who eagerly wait for these events. The variety and depth of discounts make it a surefire way to boost revenue within a short span.

Zara’s End-of-Season Sales

Zara is renowned for its end-of-season sales. They strategically mark down clothing items at the end of each season to clear inventory. With stylish items at reduced prices, they not only clear shelves but also draw in fashion enthusiasts seeking a bargain.

Starbucks Happy Hour Promotions

Starbucks runs periodic Happy Hour promotions, offering buy-one-get-one deals on select drinks during specific hours. This tactic drives foot traffic during slower times and encourages customers to try new offerings, boosting sales and customer engagement.

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