UNIT CODE: CEDOIO4

UNIT NAME: ELEMENTS OF COMMERCE

NAME: JOAN SADA ACHIENG

REGISTRATION NUMBER: HDEO21-C004-0221/2021

 PERSONAL ASSIGNMENT

1. LOCATION AND SIZE OF BUSINNESS ENTERPRICES

Factors to consider when choosing a business location

I. Accessibility; Does your businesses rely on frequent deliveries? So it is

important to consider local transport link, particularly main roads and motorways.

II. Security; Knowing the risk of potential criminal activity can help you better
prepare and take adequate precaution.

III. Competition; If there is too much competition then it may be a warning sign to
expand your horizon to a new location

IV. Business rates; It is important to research the average business rates including
rent, utility bills and taxes in the area to ensure you can afford the premises.

V. Skill base in the area; Find out the skill base in the area, Can it fulfil your
needs?
VI. It is best to go to where there is healthy bank of talents.

VII. Potential for growth; will the premises be able to accommodate business
growth or a spike in demand? Moving premises is a big upheaval and
can be time consuming and costly.

VIII. Availability of basic infrastructure; there should be good road networks

and good security.
IX. Availability of raw materials – firms are located near sources of raw materials, to obtain
the raw materials when still fresh and to ensure constant supply of raw materials
 X. Availability of market- firms are located near markets to reduce costs of transporting
finished products and to ensure steady supply of goods in the market.
XI. Availability of water and power- firms are located where there is power because it’s used
for lighting and moving machines. Water is used for moving machines, as a raw material
and as a cleaning agent.
XII. Government policy –sometimes government influences location of firms in order to
reduce regional inequalities and encourage balanced regional development
XIII. Availability of auxiliary services such as banking, insurance and transport

Factors that can lead to expansion of business

1. Smart adoption of technology
Adopting the right technology now will help organizations position for
future growth. It increases in efficiency and enhance customer relationship
will combine with less competition to position organizations for growth that
could eventually surpass pre-pandemic levels.
2. Commitment to employee; The employee must have the feeling of
responsibility to achieve goals, mission and vision of the organization he/she is
associated with.
3. Leadership; Leaders are invaluable when it comes to formulating and
communicating new strategic directions, as well as communicating with and
motivating employees to increase dedication to organization goals.
4. Customer loyalty; A customer loyalty increases profits, improves sales
success and allows for sustainable growth.

QUESTION TWO
SALES PROMOTION IN COMMERCE
 Sales promotion is the process of persuading a potential customer to buy the
product .There are different types of promotions.

1. Discounted products
Adding a discount to your products is possibly the most popular type of promotion. Customers
love to grab a bargain, so it makes sense to offer discounts every now and then. When it comes
to deciding the way you choose to promote - % vs $ - think about what will look more attractive
to the buyer. Always consider your bottom line and be sure to not constantly have a sale, as
people will just come to expect this as the norm.
 Make sure your discount is attractive
 Consider your bottom line
 Don’t do it too often
2. Free Shipping/Free Returns
According to this Walker Sands infographic, 80% of consumers would be more tempted to buy
from Amazon if they were offered free shipping. 66% would buy if they were offered next-day
delivery and 64% said they would buy if they were offered free returns. Free shipping and
returns gives the customer a sense of security that they will not lose out if they wanted to send
the product back.
If you are worried about your margins then you can always incorporate the shipping cost into
your product, or think about offering free shipping when a customer spends over a certain
amount.
 Free shipping/free returns creates customer security
 Makes it hassle free
 Incorporate shipping cost into your product
3. Flash Sale
A flash sale is basically an offer that only lasts for a limited time and it’s a great way to create a
sense of urgency for the customer to buy. Many retailers are now adopting this strategy as a way
to sell more products and get rid of surplus stock. They involve;
 Market your flash sale with a recognizable visual
 Put a shorter duration on your sale
 Promote via email and on social
4. Buy More, Save More
This kind of deal entices the customer to buy more of your stock, so it’s kind of a win, win.
There will be plenty of potential customers visiting your store that want to buy, but feel guilty
because of the price. Giving them a discount if they spend more, may just give them a little
shove in the right direction. You don’t have to offer a huge discount, but make sure it’s attractive
enough to convert visitors.
 Entices the customer
 Takes away the guilt of spending more money
 Helps to sell more stock

5. Loyalty Points
Rewarding your customers will help you build a solid base of loyal fans and it will entice people
to shop more at your online store. Providing great customer service is so important to the success
of your business, and offering a loyalty point system is a popular promotion. You could think
about setting up a virtual card: The customer can gain points every time they buy and then use
their points to get money off future purchases, or if they buy 9 items, they get the 10 th free.
 Builds a loyal customer base
 Provides better customer satisfaction
 Provide them with a loyalty system to keep coming back
6. Coupon Giveaway
This is a different way of promoting discounts. Sending your customers virtual coupons will
make the promotion seem more exclusive and will give the customer more of a push to visit your
online store. Think about sending coupons to loyal customers that have spent over a certain
amount. You could also consider sending coupons to visitors that have experienced bad customer
service, to try and convert them back to happy customers!
 Makes the promotion seem exclusive
 Keeps the customer happy
 Offers a great way to win back disgruntled customers
7. Competitions
The great thing about running a competition is that you only have to give away one thing, but
you gain so much – making it a popular type of promotion! It will not only help raise your
profile, but every person that enters, will then become an email contact that you can try and
convert into a sale. If they’re entering your competition, chances are they are interested in your
products, so running a competition is a great idea – particularly for start-ups.
 Great way to gain email sign ups
 Helps you raise your profile
 It will create a buzz on social media
8. Price Match Promise
Price match promise has fast become one of the most popular ways to promote your brand,
particularly if you have a lot of competitors out there. It allows your customers to shop with you
and will be safe in the knowledge that if they can get it cheaper somewhere else, you’ll refund
the difference. There’s nothing to lose for them and it means that you still get to keep a solid
customer base.
 Helps you stay ahead of the competition
 Provides a no lose situation for the customer
 It’s a bold move that will build loyal customers
9. Holiday Promotions
There is a reason that holiday promotions are so successful. Customers always like to spend
more around the holidays, making it the perfect opportunity for you to get your brand out there
and sell more products. You don’t have to go too crazy on your offers, but enticing customers
with slight discounts will always work in your favor. It’s also the perfect time to get creative
with your promotion and use the theme of the holiday, to sell your products.
 You don’t need to offer huge discounts
 Get creative with your promotions
 You will sell more during the holidays
Advantages and disadvantages

a) Entice Customers; The primary benefit of sales promotions is that they induce
customer traffic and sales by offering a lower price and better value proposition.
Everyone loves a bargain, right? Taking 25 percent off the price of a good without
altering its benefits increases the customer's perception of value. Companies also use
sales promotions to achieve other non-revenue-generating objectives. When a new
business launches, for instances, promotions are a way to attract customers away from
competitors. A start-up may prioritize establishing a customer base before it focuses on
profits.
b) Clear Excess Inventory; Companies also use sales promotions to clear out excess
inventory at the end of a season. Even when you don't make a profit, generating cash
with the unsold items enables you to meet near-term expense obligations and to buy
inventory for the next season. At the very least, you'll be clearing storage space in your
store or warehouse that could be costing your money.
c) Upselling and Cross Selling; Sales promotions also enable upselling, where you
persuade a customer to buy a more expensive item, and cross-selling, where you sell an
associated product to the customer. For example, you could display some excess t-shirts
near a more expensive blazer, and offer the t-shirt free with every blazer sold. Sales can
also lead to viral word-of-mouth that expands your customer base further and
encourage loyalty among customers.
Disadvantages:
a) Changes Customers' Price Perceptions; The short-term motive of sales promotions can
work against the typical long-term goals of companies, including creating customer
loyalty. Excessive price discounting trains buyers to focus on the low price as the
source of value with a particular business or good. After customers get used to certain
discounted price points, it is difficult to get them to pay regular price.
b) Limits Your Revenue; Sales promotions naturally limit your per-transaction revenue
opportunities. If you discount a $10 item to $8, you miss $2 in revenue. While
discounts may improve volume, they narrow profit margins. Narrow margins require
you to sell a higher volume of goods to generate strong profits. This point is especially
 true if many customers would pay $10 eventually for the item if it were not available at
a discount.
c) Alienating Customers; with certain types of sales promotions and discounts, it can be
difficult to control the nature and timing of purchasing. You cannot try to prevent a
customer who would pay regular price from taking advantage of a discount in most
cases. Even with an expiration date on a promotion, customers may delay coupon use
until the final moments, which delays revenue. For high-end brands, even the act of
holding a sale can alienate customers. These customers have a perception of luxury,
quality and exclusivity. Regularly holding sales could undermine this perception and
damage the reputation of your brand.
Benefits of sales promotion.

Retention and engagement.

Promotions can often shape the characteristics of brands, for example, McDonald’s Monopoly
board is something truly unique to the brand, regularly bringing consumers together to discuss
prizes and the probability of getting that all important.

Creates differentiation
The word brand was initially coined in farming as a way to differentiate cattle. A brand needs to
be different to survive, a sales promotion can be an exemplary way to make a brand stand out
from the crowd. It holds the potential to add unique value to a customer through a competition or
unique experience, creating a reason to choose your product in a crowded market.
Again, take the McDonald’s Monopoly, for instance, consumers walking in and peeling off
stickers with hope and eager anticipation that they may just have a winner. This often results in a
free apple pie but creates that true brand experience which is different to Burget King or KFC.

Creates communication opportunity

Communication is an art, an art which creates formidable relationships with consumers that
make your brand unique. A sales promotion allows brands to communicate on packaging and
enables them to focus campaigns around an event.

Creates word of mouth

A brand is not the only one who can communicate a sales promotion! Word of mouth is one of
the most positive forms of communication, especially if it is coming from a friend or colleague
as they are usually a trusted and reliable source! Give your consumers a reason to be surprised
and they will pass on the feeling of goodwill.

Creates a platform to cross-sell and upsell

If a promotion is based around giving money off a next order or something in a similar vein, then
it can hold valuable opportunity to get sales around another product.

Creates a reason to buy

All the points above drive sales and make customers decision-making much simpler if a brand is
offering a similar product but something additional, then the consumer will often select that
product and get more for their money!

Creates a focused marketing approach

A sales promotion often becomes an event for the firm and then allows a company to focus all its
channels of marketing. A focused approach can force a brand to change the way they market
themselves thus creating brand identity through those changes.

Creates greater revenue

Put simply, more sales from your promotion will create higher revenue. However, brands need to
always calculate their costs and ensure they are aware of how many people may redeem the
promotion and ensure that it is a profitable endeavor.

Creates a source of information

When customers attempt to redeem brands can often retrieve data such as email addresses and
their home address. This creates the opportunity to target a customer through segmentation, you
can then use direct mail or email campaigns to create personalized marketing.