Transactional Marketing: an Explainer

Oct 19, 2020
Reading Time: 2 minutes
Written by Chloe Yoo

Are you thinking about starting a business? How are you going to achieve the best outcomes for your business? The ultimate goal for marketing is to increase sales. One of the most common approaches used is transactional marketing. Find out everything you need to know about transactional marketing and whether it is a suitable strategy for your business.

What is transactional marketing?

Transactional marketing is a promotional strategy that focuses on maximising individual sales. This is often referred to as ‘point of sale’ transactions. It is more about selling to as many customers as opposed to building long-term relationships with clients (‘relationship marketing’). In short, transactional marketing is saying, ‘we have what you need so come and buy it from us’. An example of this is home shopping or cable shopping channels. The salesman makes a pitch about a product and says that the first 100 people will get it at a lower price. Here, the purpose is to get viewers to call and purchase their products. Another example is when beauty stores provide free samples at the door to get customers to enter the stall. Even if there is no guarantee that those customers will return tomorrow, the transactional marketing approach is that more customers will come nevertheless. 

Relationship marketing

Relationship marketing, also known as relational or relation marketing, focuses on building brand loyalty. In other words, it is like saying ‘we are here and we can help you’. For example, Apple Inc. uses this approach with their iPhones. Over the last decade, people who have always used iPhones purchase them again, even if they are overpriced consistently. In the case of the iPhone, Apple Inc. may have started with transactional marketing and transitioned to relationship marketing. For more information on the core principles of relationship marketing, see here

Four P’s of transactional marketing

There are FOUR (4) critical aspects of transactional marketing, called the Four P’s:

  1. Product;
  2. Pricing;
  3. Placement; and 
  4. Promotion.

1. Product

When it comes to transactional marketing, the emphasis is on satisfying the customer’s needs in exchange for goods and services. The goal here is to create a product that meets these needs.

2. Pricing

The next step is to set the price of the product. The price must balance between being profitable to your business as well as being attractive to consumers. 

3. Placement

Another critical step is to identify a place to distribute your products or services. You must understand your target customers and determine how to reach them. For example, if you sell hair products, you may consider distributing them at hair salons, chemists or pharmacies, and supermarkets. 

4. Promotion

The final step is to create a profile for your product that is visible and appealing to your consumers. To do this, you should consider how to reach your consumers and inform them about your products or services. These include television, radio, social media and flyers. It is also useful to consider other methods such as special offers, coupons or deals.

Need further assistance?

It is crucial to establish a marketing strategy. For information on this, see here. If you require further assistance regarding your business, we recommend you seek help from our lawyers

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