Table of Contents
- What is sales promotion?
- Classification of sales promotion
- A) Consumer sales promotion/consumers directed
- B) Trade sales promotion/trade market directed
- Trade promotion techniques
- C) B2B market directed
- Objectives of sales promotion
- Sales promotion strategies
- What are the examples of sales promotion?
- Frequently asked questions
What is sales promotion?
Sales promotion refers to a marketing strategy where a business makes use of short-term campaigns to spark up the interests of the public and create demand for a product, service, and other offers. Primarily, businesses make use of sales promotion to influence consumer behavior and motivate target consumers to buy a product as well as trigger an up-rise in purchases in the short term. The aim of this is for the business to arrive at a benchmark or a goal. The immediate purpose of sales promotion is to achieve an upward increase in sales. Several other benefits exist to building out a strategic sales promotion technique with a business’s marketing team.
Sales promotion, therefore, involves the development of various tools such as point-of-purchase displays, free samples, exhibitions at trade fairs, news releases, price reductions during special sales, etc. In essence, sales promotion is any activity that firms use to stimulate sales of their product that takes place once or over a limited period of time.
A firm can direct sales promotion to consumers or consumer promotion or to middlemen in form of trade promotion. Aside from manufacturers, distributors and retailers may initiate their own sales promotions on a periodic basis in order to clear their inventories. The product the firm is promoting has to be large in supply. If the reverse is the case, then there should be no need to engage in any special activity to push sales upwards.
In an economy with full industrialization where they have solved the problems of production, sales promotion is the major tool that firms use.
Classification of sales promotion
Sales promotion is categorized into three major types namely;
- Consumer sales promotion/consumers directed
- Trade market directed sales promotion
- B2B market directed sales promotion
A) Consumer sales promotion/consumers directed
Consumer sales promotion is the promotion that a firm directs towards consumers. This is the most popular form of promotion as the intention of the firm is to make products appealing to the final consumer. Virtually every day, consumers are exposed to sales promotion. The major motive behind directing sales promotion to consumers is to increase sales by attracting new customers and gaining the affection of the existing ones. However, there are buyers that are habitual to looking for sales promotion schemes before making any purchase decisions.
Consumer-directed promotion techniques
Irrespective of the category of a business or industry, there are various examples of promotion techniques and ideas it can undertake to align with its sales needs. The following are examples of consumer promotion ideas;
- Free samples and gifts
- Price-off special sales
Free samples and gifts
This is an offer or product trial a firm gives to its target customers. It is one of the most common ways firms introduce new products. They usually do this to maintain goodwill. In other words, distributing free goods and samples helps in increasing brand awareness. It as well triggers the psychology of ownership where the target consumer chooses the brand product if he liked the sample. When a firm offers free gifts, it is attracting new customers as they acquire more while they pay less.
Price-off special sales
This refers to the different ways in which a firm reduces the price of its product regular package such as starting the price reduction on the package itself. Retail establishments conduct sales at specific periods in a year. The feature price reductions that are attractive on different products on merchandise. For example, August sales are popular in Nigeria as it helps in clearing inventory before restocking in anticipation of the Christmas selling season.
This refers to a low-value item of merchandise that a firm offers as a bonus to purchase a particular product. This may be separate from the product package and as well may not be. An example is a case whereby a generator manufacturing firm inserts a football into the generator box.
This is a situation whereby a firm invites consumers to participate in sweepstakes or contests in which a fraction of them wins prizes such as cash, goods, scholarships, or free trips somewhere. In a sweepstake, the names of consumers are included in a draw to determine the price winners. In a contest, consumers are called to submit an entry that includes a competing quiz advertised in a newspaper. Here, the general panels of judges will scrutinize it. As a company conducts a contest, it also seizes the opportunity to collect extra data on consumers which includes data on demographic variables.
B) Trade sales promotion/trade market directed
Trade promotion, also known as dealer promotion is a technique marketers use to target all consumers including the middlemen within their channel of distribution. In other words, trade promotion aims at luring members of the distribution channel to carry the products of the marketers. Once these products are stocked, marketers then utilize promotions in other to give more strength to the channel relationship. In essence, firms conduct trade promotion to stimulate consumer purchases and the effectiveness of middlemen (dealers, agents, wholesalers, and retailers). Basically, trade promotion is directed at the middlemen. When a firm strategizes its sales promotion, keeping in mind the dealers, distributors, or agents, it refers to trade promotion.
This type of sales promotion makes provision for the devices. This is to inform, remind, and stimulate buyers to buy the products. Those who see these devices are usually in the mood of buying and it is easy to persuade them to buy those products.
Trade promotion techniques
The following are techniques that firms use in carrying out trade promotion;
- Buying allowances
- Free goods
- Sales contests
- Trade fairs
This has to do with a short-term cash price reduction or discount on the price of each product in bale, case, roll, and other quantities. This helps to encourage the middlemen to purchase these items as well as the quantity that they may not buy on an ordinary basis. This usually takes place during the introduction of a new product.
This refers to an offer of a certain amount of a product to wholesalers and retailers at no cost to them. However, the condition of acquiring these free goods lies in the purchase of the stated amount of the same or another product.
This is an instance whereby the manufacturer takes it upon himself to pay all or part of the cost of advertisement that the dealer places in his local media arid which features the product of the manufacturer. This gives the dealer the incentive to stock as well as push the sales of the product upwards.
Manufacturers arrange sales contests for sales distributors, retailers, and their salesmen in order to stimulate and motivate them to perform at a greater level. The prize award with regard to this can either be cash or non-cash. However, this prize must be attractive enough to stimulate all sellers to participate.
Firms can organize trade fairs where middlemen meet and also the consumers. This helps in creating a good impression of the brand to the public. Through this, distributors, agents, and other middlemen will be able to get relevant information about the brand and pass it to the final consumers.
C) B2B market directed
The term B2B stands for Business-to-business dealings. It is a relevant subset of sales promotion and the target goes to the business-to-business market. Many industries use B2B sales promotions even though this promotion may not carry the beauty associated with consumer sales promotion or trade promotion. Firms and industries use this form of promotion as a means of moving clients to action.
B2B market directed techniques
The common techniques under the B2B are;
The most widely used techniques for B2B promotions are:
- Joint promotion
- Trade fairs and exhibitions
- Exclusive showrooms
When two or more brands come together with the aim of gaining visibility, they may engage in the joint promotion. It is of great advantage because two brands with established equity endorse one another, their likelihood of succeeding in business will supersede regular advertising. Firms that engage in joint promotion do not pose threat to one another. They aim at the same target audience and fall under the same usage category. For instance, a washing machine and detergent stand to gain when it comes to the competitive edge as they endorse each other. This implies that they are not in direct competition with each other.
Joint promotions may be at an emerging stage, speedily becoming a relevant tool for marketing. This technique is bound to experience a lot of innovation and sophistication in sooner time as the need for closer interaction with consumers increase. the joint promotion which implies joining hands together to gain visibility provides for a mutual increase in brand loyalty also.
Trade fairs and exhibitions
Trade fairs and exhibitions provide a temporary marketplace where buyers and sellers meet. They are different from showrooms. These activities help in creating a good impression of the brand without creating actual demand. When trade fairs and exhibitions become successful, they give rise to the establishment of new business, trading, and competition.
In general terms, firms use the idea of showrooms as a tool of distribution. In the face of the current growth in competition and unfair undercutting that dealers do, there are a number of consumer durable companies such as opening plush, showrooms, arcades, and galleries. These are powerful sales promotion tools that help in boosting the sales of firms.
Exclusive showrooms offer companies with the great advantage of being able to give the consumer the impression about the whole range of products. This is usually at a time when every company is moving in for diversifications and range expansions. However, showrooms are only additional means of sales promotion/distribution as this completely does away with the distributor or dealer network.
This has to do with providing funds and other support to a beneficiary in order to make activities become financially viable as well as to gain some advertising, public relations, and other marketing advantages. Sponsorship can be in form of money, trophies, and other forms of items. This beneficiary can either be an individual or an organization. Normally, firms invest in sponsorship in order to gain some advantage in the marketplace.
Objectives of sales promotion
The objectives of sales promotion include the following;
- Create a market for new products
- Remain competitive
- Gain dealers’ trust and increase sales
- Take products to new markets
- Increase brand awareness
- Woo existing customers
- Clear inventory for restocking
Create a market for new products
There are times that it becomes difficult to establish demand for new products in a market where similar products exist. In such cases, the company will have to embark on increasing sales by making use of sales promotion strategies such as discounts, free samples, trade fairs, etc. In essence, the aim of sales promotion is to promote a specific product or service which is usually a new one. This is a great tool for companies because it attracts the attention of customers to the product and makes it so appealing to purchase.
Another objective of sales promotion is for companies to remain competitive in the market. They make use of these temporary strategies to compete with the short-term marketing strategies of competitors.
Gain dealers’ trust and increase sales
When a company embarks on sales promotion, it helps in increasing sales of products. In turn, this increases the income of dealers and causes them to prefer the brand more. In general, increasing sales is the most obvious reason for a company to start a sales campaign. It is easy to say that luring customers from rivals can take place by cutting down prices. However, this alone is not sufficient as packaging, design, and quality are also relevant in facilitating the increase of sales.
Take products to new markets
Oftentimes, it is hard to enter new markets. However, sales promotion helps a firm to increase traction and make more customers give the new product a try. In this case, marketers of the brand can offer discounts to new customers. This, in turn, will make more people interested in the products. They may still have doubts, but when there is room for them to have some little savings, this will help stimulate their demand for the products.
Increase brand awareness
Sales promotion aims at increasing brand awareness because of the attractive incentives present. This eventually will give rise to more sales. In essence, this market strategy helps a firm in creating public awareness about its brand.
Woo existing customers
Sales promotion helps a firm to tackle the illegal strategies that competitors may adopt and keep customers with the brand. It helps in increasing customer loyalty and timely express gratitude to regular customers. This will give customers the impression that the firm cares so much about them and will come back more often. This is a reason why many businesses embark on loyalty programs.
Clear inventory for restocking
This is an important objective as there will be a need to clear goods in a store before inventory taking and restocking. A firm can carry out this activity on a periodic basis such as quarterly, semi-annually, or annually. In other words, it makes it easy for a firm to achieve inventory turnover.
Sales promotion strategies
The three broad strategies of sales promotion are;
- Pull strategy
- Push strategy
- Hybrid strategy
This is a strategy that aims at getting customers to pull the products from the company. This has to do with the use of marketing communication and initiatives such as seasonal discounts and financial schemes. Therefore, this strategy works towards getting making the final consumer develop an interest in the product to create a demand. With the presence of demand, the supply chain pulls the products through as retailers enquire from suppliers and distributors who in turn enquire from the manufacturer about the product.
The push strategy refers to a strategy that pushes a product away from the company to its customers. This has to do with convincing the middlemen in the channel of distribution to push the product to the final consumer through the use of promotional and personal selling efforts. In this strategy, firms use tactics developed particularly for sellers, merchants, dealers, distributors, and agents. Pushing products from the manufacturer to the final consumer through the supply chain involves incentives offered that motivate each middleman to convince the next person to buy the product.
The hybrid sales promotion strategy involves both pull and push strategies to sell the product with the least resistance possible. Here, firms attract new customers using special coupons and provide incentives to the middlemen to sell the products of the brand.
What are the examples of sales promotion?
A firm can promote its products for a limited period of time using several tactics. A few examples here are;
- Black Friday sale
- Buy one, get one
Black Friday sale
This is one of the most popular sales promotions all over the world, Jumia is a major example as it carries out black Friday sales oftentimes. They sell their products are a discount rate, lower than the normal price. It is a strategy that attracts customers to patronize the marketers. As earlier stated, it is for a limited period of time, so customers make swift decisions to avoid missing out on the offer.
Buy one, get one
Another common example of sales promotion is the buy one, get one strategy. This is where customers gains reward for buying a product as the name implies.
Frequently asked questions
What are the 4 types of sales promotion?
- Consumer sales promotion
- Trade promotion
- B2B sales promotion
- Publicity/public relations
What are the 8 types of sales promotions?
In this context, the different types of sales promotion techniques and ideas include;
- Simple discounts
- Limited time offer
- Free shipping
- Special prizes
- Contests and giveaways
- Abandoned cart discounts
The simplest sales promotion strategy is for a firm to cut down prices and display them on its category and product pages. This method tends to be straightforward and efficient. It is a prerequisite for the offer to be attractive enough to persuade customers to buy it.
Limited time offer
This technique is basically the same as the simple discount method. The difference is that it will not last for a long period of time. It is in the context of “The sales will end in one hour! Hurry and do not miss out!!”. The basis of this type of promotion is on the basis of the sense of urgency which gives people the motivation to make swift decisions in order not to miss the opportunity. In such promotions, it is important to advertise the sales properly before the day of the sales.
Popularly, food delivery businesses and online stores make use of the free shipping technique. A famous example is AliExpress sellers as they oftentimes offer delivery at little or no cost.
Although this method offers discounts, it offers it implicitly. Rather than just cutting prices, a firm offers a special price that can have a great psychological impact on consumers. However, this method is only efficient when q firm offers low prices for something with a clear value. That is, the technique will not work out if customers have no idea about whether the price is good or not.
Bundling encompasses different types of promotion techniques on the basis of the same idea. In this case, customers can benefit from buying more than one product such as buy two at a discount, buy one and get one free, etc. For dropshipping sellers, this is another useful strategy.
Contests & giveaways
When a company runs contests and giveaways, it is a great tool in engaging the audience which includes social media accounts and turning some of them into actual buyers. In this case, a company can make up an interesting competition and offer a prize either a coupon or a gift.
Abandoned cart discounts
There are situations whereby buyers add products to the shipping cart but change their minds and leave the site. Those carts that the customers abandoned refer to abandoned carts. To return these customers, a company can send emails to them, telling them that they have gotten goods they wanted to purchase. However, offering these goods at a discounted rate will make it more appealing and convincing to the customers. To send a promo code alongside the letter will be a great idea.
There are promo codes and coupons that company marketers send to customers as part of their email marketing campaigns. This method of informing customers or clients of sales that are upcoming, seasonal discounts, special offers, new products, etc, is very efficient.