Sales promotion is a process that persuades a potential customer to purchase a product. Sales promotion is often designed so that it may be used as a short term approach to increase company sales. Therefore, sales promotion is not a justifiable approach of increasing long-term customer loyalty. There are also some types of sales promotions which target customers in general whereas other types target a firm’s sales force and its intermediaries.
There are several factors that one needs to put into consideration when designing a good sales promotion strategy and they include;
- Sales Promotion Cost
- Target Audience
- Product Brand Image
- Customer Loyalty
- Pricing of Products
Sales promotion is a pull marketing technique which helps in promoting new products into new markets. Some methods of sales promotion include product discounts, free gifts, free product trials and access to customer loyalty programs. If a brand intends to increase its product sales, the best option to use is sales promotion. This will enable the brand to increase its sales, attract new customers and retain existing customers through new product offers.
Methods of Sales Promotion
Sales promotion is an approach where a customer is induced to purchase or buy more. There are different methods of sales promotion that businessmen use to induce customers to purchase from their companies. They include;
- Price Discounts – This is the reduction of the price on a product by a particular percentage. The man aim is to attract more customers to purchase the discounted product
- Quantity deals – Here, salespersons offer sales packages where they offer extra quantity of the product purchased by a customer at the same price for example the offer stated as ‘Buy three get one free’ on beauty soaps such as Geisha and Imperial Leather
- Coupons – This is a type of product certificate that entitles the customer a specific saving on the purchase of a particular product. It is often issued b a manufacturer either directly by mail or through the use of different dealers.
- Quiz contests – This is another sales promotion method where customer’s knowledge and attraction is used to obtain additional offers on products. The quiz contests often offered include salesmen contest, customers’ contest and dealers’ contests.
- Display of products – Display of goods is a great ay of promoting products as it involves the display of products in an artistic way on shop windows or shop fronts. Big manufacturers also organize the display of their products in show rooms. An example is the display of Toyota vehicles in their show rooms.
- Public relation – This is a method of sales promotions which aims in creating a good image of a corporation to attract more customers to invest in the company. The public relation activities main goal is to institute demand creation on a specific product line.
Process of Sales Promotion
Sales promotion is the process of maximizing the use of marketing tools, strategies and resources to promote a product and service with the intent to generate demand and meet the outlined objectives. The sales promotion process consists of the following steps:
- Problem statement: The management needs to identify the need for a promotion and should consider factors such as the product/service to be promoted, who is the target audience, the budget allocated for promotional activities, what message is to be conveyed to the prospective buyers, what are the marketing strategies to be adopted, which analytical tool is to be used among others.
- Establishing objectives: The objectives are the end goals towards which all the efforts are targeted towards. Once the targeted audience is identified the management needs to outline the objectives of the promotion.
- Design of promotion mix: After the objectives are set, they serve as the basis for selecting the appropriate promotional tool; it could be advertising, personal selling, sales promotion among others. It is important to analyze all the costs and effects associated with each tool before making the final choice.
- Planning sales promotion programme: In this step, the duration of the sales promotion programme is decided.
- Pre-testing: After the sales promotion is prepared, it is tested in a few segmented markets to identify its potentials or any serious hurdles before its launch.
- Implementation: Once the promotional plan has been tested in a few selected markets, it is then ready for full market launch.
- Monitoring and evaluation: Once implementation is complete, the performance of the promotional plan is tested against the set standards and objectives and the corrective actions are taken accordingly.
Pros and Cons of Sales Promotion
There are a number of pros and cons of sales promotion and they are as follows;
Pros of Sales Promotion
- Entice customers: Sales promotion help to induce customer traffic and sales by offering a lower price and better value proposition.
- Clear excess inventory: Businesses can use sales promotion to clear excess inventory at the end of a season. Even if a profit is not made, generating cash with the unsold items enables you to meet near term expense obligations and to buy inventory for the next season. It also helps to clear storage space that could be costing the company money.
- It is a source of information for buyers: Existing as well as potential customers are made aware of your products, policies even upcoming buyers and policies.
- Sales promotion helps to supplement both advertising and personal selling. A business cannot rely on advertising and personal selling alone.
- A business can exercise better control over its sales promotional activities. The financial aspect in particular, regarding its sales promotions can be effectively managed.
Cons of Sales Promotion
- Sales promotion offers such as price cuts, free gifts, discounts may sometimes create an impression that they are being done in order to sell a poor quality product.
- There is additional expenditure by the business which leads to overall costs in promotional costs.
- Sales promotion is non recurrent in nature. It therefore cannot be used continuously. The most appropriate promotion tool has to be selected and it has to be introduced at the right time.
- There is a tendency among competitors to use the same method of sales promotion at the same time. This approach may not bring any benefit at all.
- Sales promotion activities are mostly short lived so that means the results are short lived.
Tips for Sales Promotion
- Set measurable goals: It is important to move beyond increasing sales in a sales promotion campaign. A business needs to answer this question, what is the most important objective of the sales promotion campaign? Is it drawing in more customers or is the focus more on customer retention?
- Offer real value: The customer is interested in one thing from a business; value. If all the sales promotional activities don’t offer any real value, then all the targeted marketing and promotional efforts will not lead to increase in sales.
- Select the right target audience: A business needs to have an exact idea of who clearly uses their product or service. Then it should clearly identify what kind of problems the product or service is going to solve. With these two factors put into consideration, then the sales promotion should be focused towards those who are likely to become genuine customers.
- Limit availability: Behavioral psychologists have discovered that human beings do tend to assign greater value to things that they perceive to being scarce.
- Promote widely but wisely: Sales promotion is an effort to draw customer attention to an organization’s products or services. How does a business attract attention to the promotion itself? In order for the promotion to be effective, the target audience needs to see and understand it. Promotions can be marketed or advertised just like other products are. It can be through websites, blog posts, newsletters, social media posts, email marketing campaigns among others.