What is Sales Promotion?
Sales Promotion means any steps that are taken for the purpose of obtaining or increasing sales.
Sales promotion means and includes all the activities that are performed by a producer, a dealer or a businessman to increase his sales. The main purpose of sales promotion activities is to encourage and persuade consumers to buy a particular product.
Table of Contents
Sales Promotion Definition
The term Sales Promotion has been defined by many eminent authors. Some of the important sales promotion definition are as follows:
Objectives of Sales Promotions
What is Sales Promotion Objective? The main objective of sales promotion is to increase sales.
Objectives of sales promotion are explained below:
- To Introduce New Products
- Building Product Awareness
- Creating Interest
- Stimulating Demand
- Reinforcing the Brand
To Introduce New Products
Have you ever heard about distribution of free samples? Perhaps you know that many companies distribute free samples while introducing new products. The consumers after using these free samples may develop a taste for it and buy the products later for consumption.
Building Product Awareness
This medium is effective in exposing customers to products for the first time and can serve as key promotional components. To build the product awareness sales promotion techniques own advantage of capturing customer information while exposing promotion.
Creating Interest
Marketers realise that sales promotions are very potent in creating interest in a product. An appealing sales promotion can significantly increase customer traffic to retail outlets in the retail industry. One more way to create interest is allowing a customer to experience a product (products for free or at low cost).
Stimulating Demand
It can be done by lowering the cost of ownership to the customer. This helps in stimulating sales. Because building product awareness and convincing customer to purchase the product is important
Reinforcing the Brand
After purchasing the product, mostly for additional purchase or to promote the sales. Many companies, including airlines and retail stores, reward good or preferred customers with special promotions (e.g., email special deals and surprise price reductions at the cash register).
Types of Sales Promotion
Sales promotion can be classified based on the primary target audience to whom the promotion is directed.
Three types of sales promotion:
Consumer Market Directed
Possibly the most well-known methods of sales promotion are those intended to appeal to the final consumer. Consumers are exposed to sales promotions nearly every day. Many buyers are conditioned to look for sales promotions prior to making purchase decisions.
Trade Market Directed
Marketers use sales promotions to target all customers, including partners, within their channel of distribution. Trade promotions are initially used to entice channel members to carry a marketer‘s products and, once products are stocked, marketers utilise promotions to strengthen the channel relationship.
Business to Business Market Directed
A small, but important, sub-set of sales promotions are targeted to the business-to-business market. While these promotions may not carry the glamour associated with consumer or trade promotions, B-to-B promotions are used in many industries.
Rationale of Sales Promotion
Rationale of sales promotion may be analyzed under the following points.
- Short-term results: Sales promotion such as coupons and trade allowances produce quicker, more measurable sales results. However, critics of this strategy argue that these immediate benefits come at the expense of building brand equity. They believe that an overemphasize on sales promotion may undermine a brand’s future.
- Competitive Pressure: If competitors offer buyers price reductions, contest or other incentives, a firm may feel forced to retaliate with its own sales promotions.
- Buyers’ expectations: Once they are offered purchase incentives, consumers and channel members get used to them and soon begin expecting them.
- Low quality of retail selling: Many retailers use inadequately trained sales clerks or have switched to self-service. For these outlets, sales promotion devices such as product displays and samples often are the only effective promotional tools available at the point of purchase.
Characteristics of Sales Promotion
On the basis of the above definitions, following characteristics of sales promotion may be enumerated:
- Sales promotion does not include advertising, personal selling and publicity.
- Sales promotion activities are generally performed at certain times. Thus, these are not regular activities, as display fairs and exhibitions, demonstrations, seasonal discount free-gift, etc.
- Sales promotion helps in selling and it makes advertisements and personal selling easy and effective.
- Sales promotion encourages dealers and distributors to sell the product more.
- Sales promotion encourages consumers also to buy the product.
Designing a Sales Promotion Program
Designing a sales promotion program includes the following steps:
- Deciding Sales Promotion Objectives
- Selecting Consumer Promotion Tools
- Selecting Business and Sales Force Promotion Tools
- Selecting Trade Promotion Tools
- Developing a Sales Promotion Program
- Implementing, Controlling, and Evaluating the Programme
Deciding Sales Promotion Objectives
Sales promotion objectives derive from broader promotion objectives, which derive from more basic marketing objectives for the product.
Selecting Consumer Promotion Tools
The promotion planner should take into account the type of market, sales promotion objectives, competitive conditions, and each tool’s cost-effectiveness.
Selecting Business and Sales Force Promotion Tools
Companies spend large amounts of money on business and sales-force promotion tools to gather business leads, impress and reward customers, and motivate the sales force to greater effort. They typically develop budgets for tools that remain fairly constant from year to year.
Selecting Trade Promotion Tools
Manufacturers use a number of trade pro tools. Manufacturers award money to the trade
- To persuade the or wholesaler to carry the brand;
- To persuade the retailer or wholesaler to carry more than the normal amount;
- To induce retailers to promote the brand by featuring, and price reductions;
- To stimulate retailers and their sales clerks to push the product.
Developing a Sales Promotion Program
In planning sales promotion programs, marketers increasingly blending several media into a total campaign concept.
- In deciding to use a particular incentive, marketers must first determine the size of the incentive.
- Second, the marketing manager must establish conditions for participation. Incentives might be offered to everyone or to select groups.
- Third, the marketer must decide on the duration of the promotion.
- Fourth, the market must choose a distribution vehicle.
- Fifth, the marketing manager must establish the timing of promotion. Finally, the marketer must determine the total sales promotion budget.
Implementing, Controlling, and Evaluating the Programme
Although most sales promotion programs are designed on the basis of experience and we can determine whether the tools are appropriate, the incentive size optimal, and the presentation method efficient.
Marketing managers must prepare implementation and control plans that cover lead and sell- in time for each individual promotion.
Additional costs beyond the cost of specific promotion include the risk that promotions might decrease long run brand loyalty.
Importance of Sales Promotion
The business world today is a world of competition. A business cannot survive if its products do not sell in the market. Thus, all marketing activities are undertaken to increase sales.
- From the Point of View of Manufacturers
- From the Point of View of Consumers
- From the Point of View of middlemen
Let us discuss the importance of sales promotion:
From the Point of View of Manufacturers
Sales promotion is important for manufacturers because:
- It helps to increase sales in a competitive market and thus, increases profits;
- It helps to introduce new products in the market by drawing the attention of potential customers;
- When a new product is introduced or there is a change of fashion or taste of consumers, existing stocks can be quickly disposed off;
- It stabilizes sales volume by keeping its customers with them.
From the Point of View of Consumers
Sales promotion is important for consumers because:
- The consumer gets the product at a cheaper rate;
- It gives financial benefit to the customers by way of providing prizes and sending them to visit different places;
- The consumer gets all information about the quality, features and uses of different products; iv. Certain schemes like money back offer creates confidence in the mind of customers about the quality of goods;
- It helps to raise the standard of living of people. By exchanging their old items they can use the latest items available in the market.
From the Point of View of middlemen
Sales promotion is important for middlemen because:
- It helps in selling the product; actually it supplements the work of a salesman.
- It helps in increasing the sales of the middlemen.
- It becomes very convenient for the middlemen to sell the product to the consumers for which sales promotion measures are adopted by the producers.
- It increases the goodwill of the middlemen.
- It helps in increasing the profits of a middleman.
- It offers many monetary as well as non-monetary incentives to the middlemen.
Reference
- V. S. Ramaswamy, S. Namakumari; 2009; Marketing Management; MacMillan Publishers Pvt Ltd.
- Kotler, Keller, Koshy, Jha; 2009; 13th Edition; Marketing Management: A South Asian Perspective.
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