UNIT – 4

Introduction to Sales
Promotion

Prof. Sagar Yadav

Definition of Sales Promotion

 A sales promotion is a marketing strategy where a business will use short-term campaigns to spark
interest and create demand for a product, service or other promotional offers.
 As a rule, companies use sales promotions within a limited period via various channels – social media,
email campaigns, websites, etc. They are accompanied by quality visuals, influential text, and a
reasonable objective to reach out to the target audience.
 Having been used successfully for a long time, sales promotion techniques will work for you as well,
regardless of your industry, business type, or company size.
 Sales promotions are usually done in a limited time, pushing for urgency. The sense of urgency and
time sensitivity sales promotions do boost customer engagement, generate leads, and foster brand
loyalty.
Why Do Companies Do Sales Promotions?

There are a number of reasons why businesses give importance to doing sales promotions. Here
are some of them:

1. Introduce a new product.

2. Dispose of existing stocks and merchandise.

3. Attract new customers.

4. Increase sales volume.

5. Fulfill short-term business goals.

OBJECTIVES OF SALES PROMOTION
 Creating a market for new products - Launching new products is not always easy, especially in a
market full of competitors. So, when a company yearns to establish its brand, the best way that it can
promote its product is to invest in different sales promotion activities. Explore some sales outreach
tools.

 Remain competitive - Being able to stand out in a highly competitive market can be quite
challenging. Because of this, companies gain momentum by using temporary sales promotions and
competing with other customers in the field.

 Gain business credibility - Sales promotions aim to increase sales. The increase in the number of
sales helps companies gain credibility for customer loyalty and push more prospects into the sales
pipeline.

 Increase brand awareness - Customers always love getting incentives. Therefore, by running sales
promotions, your business will have more chances of being known. As a result, you can gain customer
insights that will help you further improve your performance in the market.
● Retain existing customers - Getting new customers is essential, and so is retaining the old ones. To
increase repeat business purchases, you have to continuously give existing customers a reason to stay.
By having sales promotions, your current customers will have more reasons to continue purchasing your
brand.

● Increase sales during off-seasons - Some products or services have their peak season. When the peak
season starts to dwindle, some goods will be hard to sell. And it is vital to keep your business going. By
using specific sale campaigns, customers may be enticed to buy products at highly reduced prices.

● Customer Loyalty - Loyalty programs encourage repeat purchases by rewarding customers for their
continued business.
 Sales promotion can be categorized in two ways. The first category of sales promotion is consumer-
oriented, which focuses on the consumer pulling the product through the marketing channels. The second
category is trade-oriented, which is intended to push the product through the channel to the consumer.

 Consumer-oriented Sales Promotion provides the customer with an immediate inducement to purchase a
product. The goal is to have the consumer seek out the product and “pull it” through the marketing channel.
There are many common forms of consumer-oriented sales promotion.

• Coupons - The goal of coupons is to reduce the price of the product and prompt the consumer to make an
immediate purchase. The major goal is to increase sales quickly, attract repeat purchases, or try new
versions of a product. Consumers using coupons recognize the savings when they relinquish the coupon at
the time of purchase.

• Samples - Samples are most often used to induce trial of a new product. This tactic can be very effective to
increase sales volume during the early stages of the product life cycle and to help with better distribution.
Samples can be given out in stores, at events, or through the mail.
Trade-Oriented Sales Promotion
Trade-oriented sales promotion is focused on the channel intermediaries: the wholesalers and retailers.
The goal is for the intermediary to be incentivized to push the product to the consumer.

● Allowances and Discounts : Manufacturers provide the retailers or wholesalers with allowances to
pass along in the form of price breaks to the end customer. For example, Ford Motor Company
might offer a $3,000 trade-in allowance for the new F-150.

● Cooperative Advertising : Advertising can be expensive for retailers. Typically, they advertise
products they have in stock in an effort to induce consumers to come in and make a purchase.
Cooperative advertising is a way for manufacturers to help with the cost of the advertising, in
exchange for the retailer to advertise the products produced by the manufacturer.

● Cash Bonuses : Some manufacturers provide bonus cash as an incentive for the retail sales
associates to push the manufacturers’ products. Bonuses can be given to the sales associate who sells
the most or to the store that is the highest sales producer. It is then up to the store to determine how
best to use the cash bonus.
SALES PROMOTION TECHNIQUES

1. Buy One, Get One Free - Buy one, get one, or

BOGO is perhaps one of the most popular sales
promotion techniques. Pizza Hut, Subway, and
several other businesses use this technique to
drive sales. Offering two products for the price
of one increases sales because the perception of
freebies attracts customers.

● It is also an excellent way to clear stock, which

is why you will see a lot of retail businesses
using this technique. A lesser-known benefit of
BOGO promotions is that they increase brand
awareness because, many a time, customers
share the free product with their loved ones. .
2. Free Trial or Samples

Offering free samples is a popular technique used in

many industries, especially the beauty and retail
industries. Many beauty brands offer free samples to
their customers. For instance, Sephora allows you to
add any two samples to your order.

If you have shopped with Big Basket, you may have

received free samples of new cereals or snacks. Free
sample promotions help customers “sample” the
quality of your products, making it easier for you to
convert them into buyers.
3. Flash Sales :

A flash sale is a sale that lasts for a concise time but

offers enormous discounts. Usually, the quantity is
limited, which is why you get higher discounts than
standard promotions. You will often come across
flash sales on e-commerce websites. This technique
is worth trying if you want to create a sense of
urgency among your customers. Online businesses
must really leverage flash sales to increase sales.

How often you should run a flash sale is entirely up

to you. Some businesses run a flash sale only once
or twice a year. Some do it more often, such as once
a month. If you want to conduct a monthly flash
sale, consider scheduling it simultaneously each
month.
4. Loyalty Programs
Do you have a loyal customer base? If you do,
implementing a loyalty program could be an
excellent sales promotion technique. A loyalty
program primarily rewards existing customers for
sticking around with the brand.

Not only do they retain existing customers by

thanking them for being committed to the brand, but
these programs also encourage new customers to
become loyal.

Your loyalty program should make your customers

feel special. The cosmetic brand Sephora is the
perfect example of a good loyalty program. It offers
three levels of loyalty rewards. After you have made
a specific number of purchases, you can qualify for a
different tier.
5. Vouchers and Coupons :
Getting a new customer is five times more
expensive than retaining an existing one. To boost
sales, you should also look at ways to increase
repeat business. Vouchers and coupons are a great
way to encourage your customers to make repeat
purchases. You can offer them through emails,
product packaging, catalogs, and more.

However, vouchers and coupons can also be used to

acquire new customers. You could offer a discount
on the first purchase, encouraging visitors to turn
into paying customers. You may also use your email
marketing campaign to inform prospects of the first
purchase discounts.
6. Cashbacks

If you do not want to use discount promotions, you

could opt for cashback promotions. You may not
give your customers a discount upfront, but getting
some of their money back could encourage them to
spend it on other products sold by your brand.

Cashback promotions are a win-win for both you

and your customers. Your customers get extra
money, and you get more loyalty and business from
your customers.
 Sales promotion can be categorized in two ways. The first category of sales promotion is consumer-
oriented, which focuses on the consumer pulling the product through the marketing channels. The second
category is trade-oriented, which is intended to push the product through the channel to the consumer.

 Consumer-oriented Sales Promotion provides the customer with an immediate inducement to purchase a
product. The goal is to have the consumer seek out the product and “pull it” through the marketing channel.
There are many common forms of consumer-oriented sales promotion.

• Coupons - The goal of coupons is to reduce the price of the product and prompt the consumer to make an
immediate purchase. The major goal is to increase sales quickly, attract repeat purchases, or try new
versions of a product. Consumers using coupons recognize the savings when they relinquish the coupon at
the time of purchase.

• Samples - Samples are most often used to induce trial of a new product. This tactic can be very effective to
increase sales volume during the early stages of the product life cycle and to help with better distribution.
Samples can be given out in stores, at events, or through the mail.
SCOPE OF SALES PROMOTION

• Increase Sales Volume: One of the primary goals of sales promotion is to boost sales in the short
term. Techniques like discounts, coupons, and limited-time offers encourage consumers to make
immediate purchases, thereby increasing overall sales volume.

• Customer Acquisition and Retention: Sales promotions are often used to attract new customers and
retain existing ones. Free samples, introductory offers, and loyalty programs incentivize consumers to
try new products or continue purchasing from a brand.

• Clearance of Excess Inventory: When businesses need to clear out excess stock, sales promotions
such as clearance sales, buy-one-get-one-free (BOGO) offers, or bundle deals help reduce inventory
levels quickly.

• Market Share Expansion: Competing for a larger share of the market is another objective of sales
promotion. By offering better deals or more attractive promotions than competitors, companies can
attract customers away from rival brands.
• Brand Awareness and Visibility: Promotions can increase brand awareness by exposing more
consumers to a product or service through promotional events, sponsorships, or contests.

• Encouraging Trial and Sampling: For new products or services, offering free samples or trial
periods can encourage consumers to try them out without financial risk, potentially leading to future
purchases.

• Behavioral Change: Promotions can influence consumer behavior by encouraging them to buy in
larger quantities, switch brands, or purchase at different times (e.g., off-peak periods).

• Customer Data Collection: Many promotions require customers to provide information such as
email addresses or demographic data, which can be valuable for future marketing campaigns and
customer segmentation.

• Seasonal and Event-Driven Promotions: Sales promotions often tie into holidays, seasons, or major
events (e.g., Black Friday, back-to-school sales) to capitalize on increased consumer spending during
these times.