Even though customer loyalty has risen to the top of the priority list for companies, there are periods when they need to boost demand and raise product sales in the short term. This is where the role of sales promotion comes in.
Sales promotion is an aspect of the advertising mix in which a company utilizes a range of short-term customer-oriented tactics to raise demand for its product by making it appear more desirable and/or deserving.
Here's a more concise description of sales promotion:
Sales promotion is a marketing technique in which a product is sold by short-term appealing campaigns in order to boost demand and sales.
This technique is usually used in the following situations:
To launch new products,
In order to clear current inventories,
To gain more customers and
Temporarily increase revenue.
The Value Of Promotional Sales
Sales promotion is a useful tool for achieving short-term sales targets by persuading potential buyers to purchase a product. It is a crucial marketing technique to –
Disseminate brand knowledge to potential consumers or markets.
Maintain sales level and meet short-term sales targets.
In order to fuel demand in the short term, make the commodity appear to be a great deal.
Sales Promotion Objectives
What is the concept of a sales promotion? often hints at sales promotion goals, with the key goal being to temporarily increase sales.
Among the other goals are, but are not limited to:
To Make Space For New Products on the Market
In a market full of similar goods, it can be difficult to create demand for a new product. In such situations, the company can use market marketing tactics such as penetration pricing, coupons, discounts, and the scarcity concept to increase certain sales.
In order to remain competitive
To contend with rivals' short-term marketing tactics, businesses use temporary sales promotion techniques.
Gaining Dealers' Trust
The use of sales marketing strategies increases product sales. As a result, dealers' income grows, and they become more loyal to the company.
To expand into new markets with products
New markets are notoriously difficult to tap into. The use of a sales promotion raises traction and encourages more people to try a new product.
Boost Brand Awareness
It provides appealing rewards that help raise brand awareness, which contributes to increased sales.
Existing Customers should be wooed
Sales promotion is often used to fight rivals' poaching tactics and keep current customers loyal to the company.
Promotional Sales Strategies
There are three different types of sales marketing techniques. The following are –
Pull Strategy – The pull strategy seeks to convince consumers to ‘pull' goods from the company. It entails using marketing coordination as well as programs such as seasonal discounts, financial schemes, and so on.
Push Strategy – The push strategy seeks to move the product away from the business and into the hands of the consumers. It entails persuading intermediary networks to drive product from distribution channels to end users through promotional and personal selling efforts. This technique entails employing strategies tailored to resellers, merchants, suppliers, distributors, and agents.
Hybrid Strategy – To market a commodity with the least amount of opposition, a hybrid sales marketing strategy employs both the pull and push strategies. It entails enticing buyers with exclusive coupons as well as supplying retailers with incentives to sell the brand's goods.
The Different Types Of Sales Promotions
According to who the promotion is directed at, sales promotions can be categorized into two groups. The following are –
Promotion of Consumer Purchases
The phrase "consumer sales promotion" refers to sales promotion techniques that are directed at end users. Customers may, for example, receive a 20% discount on some items. Consumer-oriented promotion's primary aim is to boost revenue by drawing new buyers and wooing existing ones.
Consumer-targeted sales promotion techniques
The following are examples of consumer-oriented sales marketing tools:
Free Samples: Giving away free samples boosts brand recognition and stimulates the psychology of ownership, in which the person who liked the sample chooses the promoted product.
Free Gifts – Consumers are attracted to businesses that offer free gifts because they get more for less money.
Discounts/Discount Coupons – Discount coupons are an ideal way to improve short-term sales. People seek out discount coupons because they allow them to purchase items that they otherwise would not be able to afford.
Exchange Programs – Consumers like exchange programs because they get something in return for their old product.
Finance Schemes – Finance schemes such as no-cost EMIs, low-interest EMIs, and so on make it easier for consumers to buy costly products.
Shipping Costs – Exorbitant shipping costs will deter consumers from purchasing goods. Short-term shipping systems like this minimize friction.
Bundle Discounts – These offers are an excellent way to get rid of unsold stock. It entails offering packaged goods at a lower price than if the same amount of products were purchased separately.
Bulk Buying Offers – This is a perfect way to get rid of unsold inventory with a sales promotion. It involves offering bulk-buying customers a discount.
Promotion of Exchange Sales
Trade sales promotion refers to when promotional events are organized with manufacturers, distributors, or agents in mind. Offers are made inside the trade channels to entice dealers, wholesalers, agents, or distributors in this form of sales promotion. This is done to gain more shelf space than rivals, to encourage dealers to sell more of the brand's goods, and to indirectly boost revenue.
Techniques for Engaging Traders in Sales Promotion
Point-of-Purchase Displays – This involves offering retailers free point-of-purchase (POP) display units in order to improve sales.
Trade Shows – Trade shows are an outstanding promotional marketing technique in which a company markets its goods to thousands of attendees. In addition, as opposed to when purchased normally, trade shows offer significant discounts.
Push Money, also known as spiffs, is a trading strategy that involves making additional payments to traders in order to encourage them to reach certain targets. Giving them a $50 bonus per unit for selling product A and a $30 bonus for selling product B for a set period of time, for example.
Deal Loaders – These are gifts given to traders (wholesalers and retailers) in exchange for placing a large order.
Trade Offers – These are exclusive incentives offered to retailers in order to enable them to sell a particular product and boost sales for a limited period.
Buying Allowances – Vendors receive special discounts when they buy a certain amount of items.
Example of a Sales Promotion
There are several strategies that can be used to sell a commodity for a limited time. Here are a few examples of current sales marketing strategies:
Sale on Black Friday
The Black Friday sale is a seasonal event that takes place only once a year. It entails major discounts and exclusive deals that are only available for a short time. As a result, revenues rise dramatically.
Buy one, get one free.
BOGO (Buy One, Get One) is a common discount promotion in which two items are sold for the price of one. This is an excellent way to market a new product or to get rid of inventory at the end of the season.
Bonuses for referring others
Referral marketing is a great sales advertising technique in which a business allows its current customers to refer new customers to the company. This is accomplished by offering them exclusive discounts, promotions, cashback, or monetary benefits.
