Introduction

Sales Promotions are an important ingredient of the marketing mix. By

utilizing media as well as non-media channels and marketing
communications strategies, sales promotions aim to stimulate customer
interest in a particular product or service. Without proper sales promotions,
consumers are left in the dark about valuable offerings which they can
utilize to their own benefits.

This article is going to dive deep into the art of sales promotions and take a
look under the hood to understand what sales promotions actually are, how
they work and why they are absolutely necessary.

DEFINITION

Sales promotion is any activity that a business undertakes to promote

sales of its products or services. Sales promotions can be targeted to a
particular product, or may include multiple products and services offered
under a brand name. Companies aim to get new customers interested in
their offerings through the use of promotional activities such as discounts,
contests and freebies, just to name a few.

When executed properly, sales promotions can get stock moving fast and
work wonders for attracting new customers, as well as retaining and re-
igniting the interest of regular patrons.  However, these need not be the
only objectives of sales promotions, as is explored in the next section.

Objectives of Sales Promotions

Sales promotions can have multiple objectives. These can be classified
under the following heads:

To Introduce New Products Or Services

One of the primary objectives of sales promotions is to motivate customers
to try out new products or services. This is usually done through free
product giveaways and discounts. Dealers can also be incentivized to sell
the new products.
Exploring New Markets
Sales promotions can prove to be an important tool for businesses which
want to branch out to new markets and attract a steady customer flow.

Gaining New Customers

Sales promotions also aim to attract new customers. By offering attractive
discounts and conducting contests, companies hope to add new patrons to
their existing customer base.

Increasing Sales During Off–Seasons

Certain products or services have seasonal demands, or are purchased
more during festive occasions. In order to maintain a steady demand
during off-seasons businesses undertake sales promotions to entice
customers for making purchases.

Increasing Brand Loyalty And Awareness

Through sales promotion campaigns, companies strive to increase
awareness of their brands in the minds of customers, and to maintain a
loyal customer base. Customer loyalty can prove to be a deciding factor in
the success of a business.

To Remain Competitive In The Market

Finally, sales promotions help a company to remain competitive. If you are
not attracting customers through promotions, then you risk losing them out
to your competitors.

The Importance Of Sales Promotions

Sales promotions provide a means of reaching out to potential customers
directly, often at the point-of-sale. Effective sales promotions can influence
customers to make on-the-spot purchases. In this way, sales promotions
help to spread the word and increase demand of a particular product or
service. These promotional activities also help to improve customer
satisfaction.
Types Of Sales Promotions
Broadly, sales promotions can be broken down into the following two types:
Consumer Sales Promotion
Consumer Sales Promotion covers any sales promotional activity targeting
the end-user. The purpose of such a sales promotion may be to spread
awareness about the product, or to nudge the customer into making a
purchase. Discounts, sample offerings and contests are some common
forms of this type. The desired result of such sales promotions should
usually be an action on part of the consumer, preferably a purchase.

Trade Sales Promotions

This type of sales promotion is geared towards business stakeholders
such as dealers and distributors. By providing incentives, usually in the
form of discounts for increased product sales, companies motivate dealers
to move a greater amount of stock and thus increase revenue. Skillful
motivation of the dealers and distributors can go a long way towards
improving profitability and scoring over competition.

Next, let’s discuss the various sales promotion techniques that businesses
use to improve sales and achieve profitability.

Sales Promotion Techniques

With competition intensifying every day and market conditions in a state of
constant flux, effective sales promotion techniques can go a long way
towards helping companies achieve their business goals. The various sales
promotion techniques can again be divided under the same heads as
above.

Consumer Sales Promotion Techniques

Consumer Sales Promotion Techniques are geared to target the end-
customers specifically and elicit positive action from them. Some common
techniques that can be classified under this head are as follows:

 Big Discounts And Special Prices. These two are perhaps the oldest
techniques in the book, but still have a very large impact. By offering
large discounts, the seller stands to move inventory and recover costs
while the buyer gets the benefit of reduced prices.
 Free Gifts And Giveaways. The only thing better than a discount is a
free gift! Giveaways can help to gain loyal customers quiet effectively.
  Buy One Get One Free. This is another familiar method of boosting
sales. Giving away two for the price of one gives customer the right
incentive to make the purchase.
 Reward Points. This is a great way to win loyal patrons and boost
repeat sales, thus ensuring a steady flow of customers.
 Shipping Schemes. High shipping costs can turn away many a potential
customer. By providing discounted or free shipping, a seller
encourages customers to make the buy.
 Financing Schemes. Providing customers with low-interest financing
options is one of the proven ways to sell an item they may not
otherwise be able to afford upfront.
 Holiday Promotions. Nothing works better than a well-rounded sales
promotion during the festive seasons. Be sure to include a sound
digital strategy in your promotional efforts.
 Seasonal Promotions. For seasonal products, there is no better way to
improve sales than a well-crafted seasonal sales promotion.
Trade Sales Promotion Techniques
Trade Sales Promotion Techniques are obviously directed towards the
dealers and retailers. Some techniques under this head are as below:

 Trade Allowances. These are short term benefits provided to

encourage retailers to stock and sell a particular product.
 Dealer Loader. This form of incentive is provided to retailers for
purchasing and displaying a product.
Trade Contests. By engaging retailers in a contest to sell the most of
your products you stand to achieve maximum sales volume.
 Point-of-Purchase Display. This is a very effective tool to stimulate on-
the-spot purchases and encourage impulsive buying.
 Training Programs. Adequate training of dealer and retailer employees
can also help to boost sales of a product.
 Push Money. This is a targeted form of sales promotion that
incentivizes retail employees to push or promote the sales of
particular products.
It must be mentioned that this is only the tip of the iceberg. When it comes
to sales promotions, a business is only limited by its imagination and
innovative ideas.
Advantages and Disadvantages of Sales
Promotion
Advantages of Sales Promotions
 Increased Customer Engagement. One of the primary benefits of sales
promotions is that they augment customer flow and sales volumes. By
offering attractive prices a business stands to gain both in terms of
sales as well as customer acquisition.
 Move Inventory. Static inventory can prove to be a cause for concern
for any business, especially those dealing in perishable goods.
Efficient sales promotions can help to move excess stock, thus
generating revenue and clearing up occupied storage space.
 Enhanced Brand Awareness. Apart from boosting sales, one of the
major advantages of sales promotions remains the fact that they help
spread the word about your products or services.
Disadvantages of Sales Promotions
 Impact on Reputation. Excessive promotional activities can put a dent
in the customer’s opinion about a brand or service; this can harm the
reputation of the business in the long run.
 Lowers Margins. Promotional activities such as large discounts bring
down profit margins on a per item basis, thus requiring you to sell a
larger volume of products to maintain the desired levels of
profitability.
Final Thoughts
In spite of its challenges, sales promotions remain an attractive method to
improve sales, drive revenue and create brand awareness among
customers. With more innovative methods and catchy techniques, sales
promotions look set to remain relevant for the times to come.

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Sales promotion is the process of persuading a potential customer to

buy the product. Sales promotion is designed to be used as a short-term
tactic to boost sales – it is rarely suitable as a method of building long-term
customer loyalty.
Some sales promotions are aimed at consumers. Others are targeted at
intermediaries and at the firm's sales force.

When undertaking a sales promotion, there are several factors that a

business must take into account:

 What does the promotion cost – will the resulting sales boost justify
the investment?
 Is the sales promotion consistent with the brand image? A promotion
that heavily discounts a product with a premium price might do some
long-term damage to a brand
 Will the sales promotion attract customers who will continue to buy
the product once the promotion ends, or will it simply attract those
customers who are always on the look-out for a bargain?

There are many methods of sales promotion, including:

Money off coupons – customers receive coupons, or cut coupons out of

newspapers or a products packaging that enables them to buy the product
next time at a reduced price

Competitions – buying the product will allow the customer to take part in a
chance to win a prize

Discount vouchers – a voucher (like a money off coupon)

Free gifts – a free product when buy another product

Point of sale materials – e.g. posters, display stands – ways of presenting

the product in its best way or show the customer that the product is there.

Loyalty cards – e.g. Nectar and Air Miles; where customers earn points for
buying certain goods or shopping at certain retailers – that can later be
exchanged for money, goods or other offers

Loyalty cards have recently become an important form of sales promotion.

They encourage the customer to return to the retailer by giving them
discounts based on the spending from a previous visit. Loyalty cards can
offset the discounts they offer by making more sales and persuading the
customer to come back. They also provide information about the shopping
habits of customers – where do they shop, when and what do they buy?
This is very valuable marketing research and can be used in the planning
process for new and existing products.