Definition of Sales Promotion
Sales promotion is a marketing strategy where a business firm uses short-term strategies (incentives) to stimulate customers’ demand for its products or services.
Sales promotion is one of the important tools of the promotion mix. It is temporary, which aims to drastically increase the demand for products by applying customer-oriented strategies and making offers look more attractive so that customers feel they are getting the best deal.
It includes marketing activities other than advertising, personal selling, or public relations that influence consumer purchases and dealer effectiveness.
The sales promotion can be done through trade shows, coupons, demonstrations, rebates, samples, contests, and many additional activities that bridge advertising and personal selling.
The tools of sales promotion are of a short-time nature which is designed to stimulate the quicker and greater purchase of goods and services.
The use of sales promotion has been increasingly increased in modern business, due to competition in the market. Sometimes, thus it is also called “aggressive marketing.
Characteristics of Sales Promotion
The salient features of sales promotion are mentioned below,
Short Term In Nature
As mentioned above, sales promotions are done only for a limited time period i.e. short time period. Usually, such promotions are only for up to a day, a week, to a maximum of three months.
Provides Incentives
It offers certain benefits to the target customers to attract them to the company’s offerings.
The benefits it offers may include, price off, gifts, free samples, containing more products in a package than before, coupons for bulk purchases, etc.
Aims At Quick Response
Its tools are offered for short periods, hence always aiming at a quick response from the target customers. If the marketers do not get quick responses, they think their sales promotion efforts become ineffective and try for another.
Primarily Directed At Target Customers
The primary and ultimate goal of employing sales promotion tools is to uplift sales. So it is always directed at target customers, who consume goods, traders who resale goods, and sales force who help in personal selling.
Sales Promotion Tools and Techniques
The major sales promotion tools and techniques are of three types first is for consumer promotions, trade promotions, and third is for salesforce promotions. They are explained as follows,
Consumer Promotion Tools
When the sales promotion tools are used to stimulate the final consumers, they are called consumer promotion tools. The most popular sales promotion tools and techniques targeted to final consumers are mentioned below,
i. Price-Off Promotion. The price-off promotion tool involves the temporary price reduction of the product or service, it can be written on the package like “Save Rs. 5 or 10”. Which is generally done to attract customers’ attention.
ii. Rebate. A rebate is a price reduction to include immediate purchase, to sell off-season products, or to move inventory off the marketer. If the consumers already pay the full price they may get money back from the manufacturer.
iii. Coupons. The coupon is a great sales promotion strategy popularly used these days. A coupon is a certificate a buyer gets and later he can claim the discount or the product. Coupons are provided by both producers and retailers. The coupon may be inserted into the package, or it may be made available upon the purchase made on a specific occasion, etc.
iv. Samples. To promote newly launched products a sample is given to the customers for the trial. If the customers are satisfied with the trial after using it, they will go to buy that product or service.
v. Premiums. Premiums are gifts given to consumers freely or at a relatively low cost as an incentive to purchase a particular product.
vi. Prizes. Prizes are also offered to consumers based on purchases they made or contests, sweepstakes, or games. Prizes are offers to win cash, additional products, or merchandise as a result of purchasing something. Consumers may compete for prizes by answering questions (contests), filling out forms for random drawings (sweepstakes), playing bingo, or missing letters (games).
vii. Point-of-Purchase Displays and Demonstrations. Products are displayed and demonstrated where the potential buyers are to create their desire for products. Such activities can be organized during,
- the anniversary of the manufacture, during some of the national festivals,
- The opening of a new branch of the company.
viii. Product Warranties. A product warranty is an assurance to the consumers that the product will do what it is supposed to do for a specified period, during which the manufacturer provides services free of charge.
viii. Trade Shows and Exhibitions. Sometimes manufacturers organize trade shows and exhibitions for consumers, especially for the promotion and sale of consumer products and home appliances.
Moreover, the above-mentioned sales promotion tools and techniques targeted to consumers are not limited, as per the need and situation other several tools and techniques are also can be applied.
Trade Promotion Tools
When the sales promotion is directed at resellers, channel members, agents, or dealers, they are known as trade promotion tools. It is important that channel members and resellers also be motivated to increase sales.
Middle channels must be provided incentives otherwise they will divert to the competitor’s product.
The popular sales promotion tools and techniques targeted to traders are mentioned below.
i. Sales Contest. To boost sales, sometimes producers organize sales contests among the resellers. Under this contest, usually, the reseller who makes a huge sales than others will be rewarded with a cash prize or another kind. However, for the participation of such an event, the producer may specify some conditions.
ii. Credit Facilities. To help the resellers make better and increased sales, sometimes a producer provides a special credit facility or an extended credit facility to his traders for a certain period of time. And, when the traders became successful in making more sales and profit, such credit facilities were withdrawn by the producers.
iii. Push Money. Push money represents special bonuses paid by a producer or marketer to an intermediary salesforce because of selling more products through the distribution channel. This type of promotion is offered in the marketing of medicines and medical products.
iv. Cooperative Advertising. Cooperative advertising is when producers, wholesalers, and retailers jointly sponsor advertising to promote a brand. For this, the producer makes available to the wholesaler or the retailer a fund intended to help cover the cost spent on advertising.
SalesForce Promotion Tools
A salesforce is a staff who is appointed by the manufacturer to sell manufactured products to the resellers and customers through personal selling. Salesforces establish direct contact with customers, persuade them, and sell the products.
Effective sales through salesforce are possible only when the salesforces are motivated. Dissatisfied and lacking communication skills salesforce can not motivate the customers to purchase any products.
Sometimes manufacturers thus offer sales promotion tools directed at salesforce. Some of the popular sales promotion tools directed at Salesforce are mentioned below,
i. Sales Contest. In a sales contest, the sales personnel who makes more sales than other salesforces in a specified period is rewarded cash, even gifts, and travel opportunities inside and outside the country.
ii. Bonus and Commission. Companies also include bonuses and commissions to the salesperson who results in the maximum volume of sales over a given period of time. Bonuses and commissions may include cash or a certain percentage of sales.
iii. Gift Items. To motivate salesforce, the marketer also provides some gift items like mobile, watch, pen, diary, and other motivating and helpful gifts.
iv. Trade Shows and Conventions. Similarly, the companies organize trade shows and conventions outside the country. Due to this, salesforce gets a chance to travel the outside country with their spouse which is a great incentive to the sales personnel. For example, most of the Indian companies organized meetings and conferences in five-star hotels in Nepal.
Objectives of Sales Promotion
The primary objectives of sales promotion can be mentioned as follows,
Attract New Customers
One of the primary objectives of sales promotion is to get the attraction of new customers. With the help of various tools and techniques, a company can attract and make them buy even if they haven’t used that company’s products before.
Reward Loyal Customers
Another significant objective of sales promotion is to reward loyal customers. Loyal customers are the most valuable asset of any marketing company.
With various incentives the loyal customers are rewarded, which is done to maintain the market and hope the loyal customers also influence the potential customers.
Encourage Impulse Purchase
Many customers purchase products and services without any plan. If these customers are convinced about the product, they can buy at any instant. Sales promotion exactly does that. Through different tools, it encourages impulse purchases.
Create Excitement
It also aims to create a sense of excitement in customers’ minds towards the products. Through various offers, firms lure customers and make them believe that they are getting the best deal.
Promote Off-Season Products
One of the major objectives of sales promotion is to promote off-season products. Through various sales promotion tools and techniques, marketers create a market for an off-season product.
The reasons for doing this are twofold, first, it creates longevity for the product, and second, it helps to clear out the stock.
Examples of Sales Promotion
Sales promotion can be done in various ways and its examples are found all around us. Simply, when someone offers you as, if you buy one apple, you will get one at free of cost.
In addition, other examples may be discounts, black Friday sales, buy 1 get 1 free, coupons, free samples, gifts, etc. but these offers are only for a short period.
Sujan Chaudhary holds a BBA degree. He loves to share his business knowledge with the rest of the world.