All types of marketing strategies have one objective in common; generate sales. Yes, firms also focus on developing a customer base and customer loyalty. That said, businesses focus on developing repetitive customers rather than focusing too much on acquiring new customers.
On the contrary, different businesses also look for the other way round. Many brands also focus on generating sales through a vast number of one-time customers. The idea is the same; generate sales regardless of the number of loyal or repetitive customers. In business terms, this marketing strategy is termed as transactional marketing.
You may be thinking, why focus on one-time customers and not looking for long-term loyal customers? Well, this article focuses on different queries related to transactional marketing.
Table of Contents
What is Transactional Marketing?
Transactional marketing is a marketing strategy and business model that focuses on one-time or single sale transactions. The core focus in transactional marketing is to achieve the sales goals by maximizing sales volume rather than focusing on developing and maintaining long-term customer relationships.
Basically, this approach follows the most common marketing elements (product, pricing, placement, and promotion). Technically, transactional marketing is the exact opposite of relationship marketing.
Transactional Marketing Vs. Relationship Marketing
Relationship marketing, although its objective also is to generate sales, is a totally different marketing strategy. It focuses on relationship building and is very different from transactional marketing. Here are some common differences between both marketing approaches:
| Relationship Marketing | Transactional Marketing |
| Relationship marketing focuses on getting multiple sales from current customers by satisfying their needs. | Transactional marketing focuses on one-off sale transactions. |
| It is a long-term business strategy. | It is a short-term business strategy. |
| Customer commitment is high. | Low customer commitment. |
| Focuses on customer retention and customer loyalty. | Focuses on getting new customers and lesser concern about customer loyalty. |
| Relationship marketing centers on customer trust-building. | Transactional marketing centers on undertaking/making a sale transaction. |
| Frequent or higher customer contact. | Lower customer contact. |
| In relationship marketing, a business competes for customer satisfaction. | In transactional marketing, a firm competes for price induction. |
| The objective is to become the most preferred choice of customers. | The objective is to get more and more sales or orders. |
| Businesses following relationship marketing focus on product development to bring the best possible solutions for the customers. | Transactional marketing pays minimal or no attention to product development. |
Transactional Marketing Strategies
As a reader, you may be thinking, how do businesses succeed in practicing transactional marketing strategy? Well, here are some common techniques in transactional marketing.
Cross-Selling
Cross-selling is a strategy where firms encourage customers to buy related or complementary products.
Example: If a customer buys a digital camera, a firm or sale representative may recommend/persuade the customer to buy a memory card as well.
Bundling
It is a technique in which businesses sell their products or services as a single or combined unit.
Bundling Example: The value meals from McDonald’s are an excellent example of bundling. Also, shaving kits (including razor, pre-shave oil, shaving brush, lathering foam/agent, after-shave lotion, etc.) are another perfect example of bundling.
Upselling
It is a marketing strategy in which a business persuades or recommends its customers to buy the latest, premium, or upgraded version of a product.
Upselling Example: A housekeeping service can upsell its customer by offering him/her different packages—for instance, those packages may cover more rooms with a better discount.
Sales Promotion
Companies also offer short-term but attractive initiatives to create a demand for a product and service to increase sales. This strategy is mostly used to introduce a new product, clear/sell the current inventory, and attract more customers.
Sales Promotion Example: Black Friday Sale is one of the biggest examples of sales promotion strategy. Special offers and massive discounts get things done for the sellers.
Bulk/Volume Discounts
Sellers attract customers by giving huge discounts on purchasing specific bulk quantities. The discount generally percentage increases with an increase in purchase volume.
Bulk Discount Example: Amazon and Walmart get massive discounts because they purchase in bulk quantities from their vendors. This allows them to sell their products at lower prices as compared to their competitors.
Point Of Sale Promotions
POS displays are a form of promotion in which businesses organize their products or special offers near or around the point of sale (checkout or cash counters) to attract customers. This may include promoting a new product or a special offer, etc.
Point of Sale Promotions Example: Retailers are now using LED displays in their stores for price checks and to promote their products or special offers. This not only offers the customers contactless shopping (customers avoid contact with sale representatives nowadays due to covid-19), but it also works as a promotional tool.
Examples of Transactional Marketing
Cold Calling
Cold calling is one of the best examples of transactional marketing. It is a strategy in which sales representatives offer their products or services to potential customers or consumers who may have no previous interest in buying that product or service. Sales representatives persuade the customers to buy their products or services.
Brokerage firms or stockbrokers are a perfect example of cold calling. These firms contact customers mostly via phone calls and persuade them to buy certain stocks. In return, they earn through commission on every order.
Advantages of Using Transactional Marketing
Cost-Effective
Transactional marketing is a cost-effective option because of several reasons. For instance, a business doesn’t need t shape a brand image. Second, promotional costs are lower for one-time sales.
Inventory Reduction
In some industries, it is not possible to sell outdated or out-of-trend products such as clothing, shoes, or fashion products. Therefore, there is no point in keeping the inventory for next year. However, promotions and massive season-end discounts (which are transactional marketing strategies) can help businesses to sell unsold inventory.
Minimal Emotional Attachment
The core objective of transactional customers is to look for cost-effective options. This means they prefer short-term relationships with a specific brand, and there will be no hard feelings or expectations from both sides. However, if a business can offer the best possible package, it can stay in the game easily.
Affecting Customer Behavior
Promotional pricing affects customer behavior as it boosts a product’s demand which ultimately brings more sales. Technically, when you sell a good product at promotional prices, the customer thinks that he/she is buying a quality product at a lower price and purchase in bulk quantities. In the end, businesses generate more revenue through higher sales volume.
Increase In Sales Volume And Generate More Revenue
Most of the transactional marketing strategies, such as promotional pricing, discounts, etc., focus on increasing sales volume. Therefore, even if you are selling at a lower profit margin, a higher number of sales will keep things in balance.
Disadvantages of Using Transactional Marketing
Less or No Brand Loyalty
Transactional marketing just focuses on generating more sales, and the transactional customer just looks for the cheapest or cost-effective solutions. There is no concept of brand loyalty.
No Focus on Product Development
Companies following transactional marketing strategies don’t focus on product development. Therefore, this makes it very difficult for them to stay in the competition.
Reactive Approach
Transactional marketing is a business model where firms react to market trends rather than being proactive. There is almost negligible attention to changing customer preferences or market trends. These companies only react when something changes in the market and then react accordingly. So, that means they can be thrown out of competition easily.
