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Impact Of Flash Sales On Profit Margin

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Question:

Discuss about the flash sale, how they help in generating loyal customers and their impact on the profit margin of the companies.
 
 

Answer:

Introduction:

The report gives an overview of an aspect of international business. The report therefore discusses flash sales, how it contributes in generating excitement and loyalty and its profit margin.

Flash Sales Definition:

When a product or products of a company is offered at a huge discount for a limited period of time, it is known as flash sales (Grewal et al., 2012). However, daily deals are smaller subset of flash sale. It is also important to consider how various companies run flash sales. On the contrary, a flash sale is different from a daily deal in the following ways:

  • Daily deal focus locally whereas flash sales are available on national level
  • Daily deals focuses more on the virtual offers while flash sales focuses on sale of the of physical products such as clothes
  • The companies offering flash sales buys inventory much before time while daily deals depends merely on the virtual offers.
  • Daily deals are bounded by time where flash sales are bounded by quantity

Generation of Excitement and Loyalty:

As the flash sales represent a perfect combination of price and quantity limitation they seem to excite the customers. This kind of sale helps in the creation of loyalty amongst the customers. However, flash sales can be a rewarding option for the loyal customers by providing them access to exclusive deals.

Impact of Flash Sales on Profit Margin:

The margin of profit is an important consideration while determining flash sales(Piccoli 2012). Thus, it is important for the companies to attract the right kind of customers that will help avoid the deal hunters. Companies can ensure flash sales to be profitable by considering it as a part of marketing strategy.

Conclusion:

The report ends with a discussion on the profit margin of flash sales. Through the report one also gets to know about flash sales, their role in creating loyal customers and their impact on the profit margin of a company.

 

References:

Grewal, D., Roggeveen, A. L., Compeau, L. D., & Levy, M. (2012). Retail value-based pricing strategies: New times, new technologies, new consumers. Journal of Retailing, 88(1), 1-6.

Piccoli Ph D, G. (2012). Emerging marketing channels in hospitality: A global study of internet-enabled flash sales and private sales.

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