Sales promotion is one way for companies to generate more sales. It complements other promotion strategies such as advertising, personal selling, direct marketing, and publicity.
What is a sales promotion? Why does it matter?
Sales promotion is an activity to attract attention to certain products in the short term. The aim is to increase sales, stimulate market demand, or increase product availability.
Sales promotion is part of the promotion mix. The company designed it as a short-term tactic to increase sales. So, this promotion strategy is unsuitable for building long-term customer loyalty.
Some sales promotions target consumers. In this case, the seller is trying to persuade the customer to buy the product. Others are for intermediaries and company salespeople.
How does a sales promotion work?
The company has a variety of options for running sales promotions. In the following, we present some of them:
- Price discount. At certain times, for example, holidays, sellers offer price discounts. Customers get lower prices than usual in the regular season.
- Coupon. Customers receive coupons or deduct coupons from brochures or packaging. With the coupon, they can buy products at a lower price later.
- Lottery. The sellers offers buyers to take part in the opportunity to win prizes.
- Gifts. The seller offers other product bonuses, usually complementary products when you buy an item. For example, the sale offers a bonus of one sachet of shampoo when you buy a soap refill.
- Contest. The seller holds a contest and tells the buyer to do a task or show specific skills. The winner of the contest then gets a prize.
- Voucher. The concept is like coupons, where consumers can exchange vouchers for getting price discounts.
- Loyalty card. Customers can use this card when buying goods. The more often you shop, the more customers get points. At other times, customers can exchange these points for cash or certain items.
- Product samples. Sellers often offer product samples, both free and at low prices, to stimulate future purchases. This tactic is common for new products.
- Point of sale material. Sellers decorate their shops with posters or display stands to attract customers to their store.
- Rebate. For certain product purchases, the seller may give you a cash refund.
Advantages and disadvantages
Sales promotions offer an alternative way to boost short-term sales. Through this, companies can also encourage consumers to divert customers’ purchases from competing brands.
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Furthermore, sales promotions become a company tool to educate customers about product improvement or the introduction of new products. It is also possible to bring more customers to retail stores.
But, this tactic has no long-term impact. That does not encourage customers to be loyal in the future. Customers might buy to take advantage of price discounts or get prizes. When discounts don’t exist, they don’t buy.