What is sales promotion?
Sales promotion is one of the forms of promotions or marketing communications used by organizations to communicate with the marketplace. Together with advertising, public relations and personal selling – sales promotion makes up the promotions mix or the marketing communications mix of a company.
Sales promotion refers to temporary incentives offered by an organization to either their customers or their resellers, with the intention of increasing the sales of their products. Therefore, it is necessary to classify sales promotions into two broad categories – sales promotions aimed at consumers and sales promotions aimed at distribution channels (which is more commonly referred to as trade promotion).
Main Types of Sales Promotions
Free samples refer to when customers are provided a sample of a product for free. A common example is product samples given away free with magazines. An organization may use this form of promotion as it can be effective in removing any monetary disincentive a customer may have about purchasing and trailing a new product.
Premium offers refer to when a bonus second product offered to a customer for purchasing a product. This bonus may be given to the customer for free or at a substantial discount. An example of a premium offer could be giving customers free video games with the purchase of a video game console. An organization may use this approach to promotion as it gives customers extra incentive for purchasing a product.
Loyalty programs offer customers some form of bonus or reward for spending money at a specific store. Examples of loyalty programs are rewards cards used by many supermarkets or frequent flyer point systems offered by airlines. An organization may use this form of promotion in order to create customer loyalty and drive customers to make repeat purchases.
Contests refer to competitions held by organizations associated with their products. An example of a contest could be a chocolate bar company offering the chance to win a ‘Free Bar’ inside the wrappers of their products. An organization may use this form of promotion to offer additional incentive for consumers to purchases their product over similar competitive products.
Coupons are vouchers that allow consumers to purchase products at a discounted price. A common example of coupons would be discount vouchers distributed to fast food chains. An organization may use this form of promotion to advertise a new product.
Discounts refer to when products are temporarily offered at a lower price. Examples of a discount would be clothing items marked at ‘15% off’ within a store. An organization may use this form of promotion in order to increase sales and attract new customers.
Rebates refer to systems that allow customers to obtain a refund of some of the purchase price. An example of a rebate would be a company that offer a partial refund when customers mail in a proof of their purchase. This is refereed to as a mail-in rebate. Rebates may also be offered immediately at the time of purchase, this is an instant rebate.
An organization may use this form of promotion to capture consumers’ attention and offer an incentive to purchase their product over similar competing products. Rebates are also advantageous for organizations because in order to claim a rebate a customer needs to make an application in which they provide personal details, this information can be used by the organizations for research in consumer behavior.
Point of purchase promotions
Point of purchase promotions refers to any promotions that take place within a store. Examples of point of purchase promotions would be an in-store demonstrations or trial of product. Often supermarkets will offer in store trials of products. In the case of free trials within a supermarket, an organization may use this form of promotion because the customer feels a sense of obligation to purchase the product after the free trial.
Sales Promotions Aimed at Resellers (trade promotion)