Which discount is commonly used to incentivize bulk purchases or regular customers?

The correct answer is trade discounts, which are typically offered to encourage bulk purchases or to reward regular customers. A trade discount is a reduction in the listed price of goods offered by sellers to buyers, often based on the volume of the purchase or the ongoing relationship with the buyer. This practice allows businesses to incentivize customers to buy larger quantities or to foster loyalty among regular customers.

Trade discounts are beneficial for both the seller and the buyer. For the seller, they can lead to increased sales volume and build customer loyalty, while for the buyer, they provide an opportunity to reduce costs on bulk purchases or by maintaining a long-term relationship.

Settlement discounts, while related to payment conditions rather than purchase volume, specifically incentivize prompt payment rather than the purchase of larger quantities. Referral discounts are intended to reward customers for bringing in new business, focusing on customer acquisition rather than bulk buying. Special promotional discounts tend to be temporary reductions used to boost sales for a specific period or to promote specific products, rather than regularly applied reductions for bulk purchases. Hence, trade discounts are the most appropriate option for encouraging bulk buying or rewarding regular customers.