Sales promotion
One of the four components of the promotional mix is sales promotion. (Publicity/public relations, personal selling, and advertising are the other three components of the promotional mix.) For a predetermined, limited period of time, media and non-media marketing communication are used to boost market demand, stimulate consumer demand, or improve product availability. Contests, coupons, giveaways, loss leaders, point-of-purchase displays, premiums, prizes, free samples of products, and rebates are a few examples.
Sales campaigns can target customers, salespeople, or people in the distribution chain (such as retailers). Consumer sales promotions are marketing campaigns that are aimed at consumers. Trade sales promotions are advertising campaigns that target retailers and wholesalers. Many people view certain sale promotions as gimmicks, especially those that use unusual tactics.
The term "sales promotion" refers to a variety of marketing initiatives that aim to offer consumers, wholesalers, retailers, or other target audiences extra benefits or incentives in an effort to boost sales right away. These initiatives might aim to increase product interest, trial, or purchase. Coupons, samples, premiums, point-of-purchase (POP) displays, contests, rebates, and sweepstakes are a few examples of the tools used in sales promotion.
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Scope and Role of Sales Promotion
In order to make an immediate sale, sales promotion is defined as "a direct inducement that offers an extra value or incentive for the product to the sales force, distributors, or the ultimate consumer."
Some of the important aspects of sales promotion are as follows:
1) Sales promotion involves some sort of inducement that gives customers an additional reason to purchase. A promotional program's main component, the incentive can take the form of a discount coupon, a cash refund, a free sample, or additional product.
2) Sales promotions can also act as a motivator for marketing intermediaries like retailers and wholesalers. Retailers are financially motivated to stock and advertise a manufacturer's products or to reach sales targets by a trade allowance or discount.
3) Sales promotion is basically a "acceleration tool," made to hasten the selling process and increase sales volume. Sales promotion strategies can persuade customers to buy a lot of a particular brand or to act right away by offering an additional incentive.
4) One last observation about sales promotion activities is that they can be directed at various marketing channel participants. Consumer-focused and business-focused promotions are the two main divisions of sales promotion. Samples, coupons, premiums, contests, refunds, rebates, bonus packs, price reductions, and event marketing are just a few examples of consumer-focused sales promotions. Dealer contests and incentives, trade allowances, point-of-purchase displays, sales training programmes, trade shows, cooperative advertising, and other initiatives aimed at inspiring distributors and retailers are examples of trade-oriented sales promotions.
Philip Kotler notes in a piece about sales promotional tools that "they have three distinctive characteristics:
Communication: They gain attention and usually provide information that may bead the consumer to the product.
Incentive: They incorporate some concession, inducement or contribution that delivers value to the consumers.
Invitation: They include a distinct invitation to engage in transaction now."
Comparison of sales promotion with other methods
Difference between Advertising and Sales promotion
Scope of sales promotion
- Brand switching: The objective of some sales promotions is to induce brand switching. This means encouraging consumers to purchase the promoted brand instead of the regular brand that would have been purchased, had there been no sales promotion.
- Repeat buying: Sales promotion influence the consumer in a manner that increases the chances of purchasing the same brand time and again.
- Purchase more or accelerating timing: Consumers purchase more quantity than their immediate requirements. It also means the purchase timings are changed.
- Increasing category expansion and consumption: The consumers increase consumption of total product category as a result of sales promotion.
Role of sales promotion
Temporary price reductions (price off) significantly boost sales: There is ample proof that promotions boost a brand's short-term sales by a significant amount. Studies consistently show that brands that are on promotion have high sales effects and high price elasticity. The temporary price reductions increase the value of the product to the consumer and prompt immediate action, which is the economic justification for the promotional response. The increase in sales can be measured based on brand switching, the expansion of primary demand, and consumer stockpiling during a promotion.
Sales promotion leads to brand substitution with the product category: Due to brand switching, accelerated purchase times, and stockpiling, sales rise during the promotional period. Studies on brand switching have revealed that the effects of switching between brands within a category are asymmetrical, meaning that promotions for higher quality brands have an unbalanced impact on lower quality brands. Higher quality brands encourage more people to switch to them during a promotion than lower quality brands do. Researchers have put forth the theory that brands with higher market share have stronger brand equity and draw switchers more than brands with lower market share.
Sales promotion leads to purchase acceleration/stockpiling effects: Customers may purchase more of a particular product category or make an earlier purchase than usual in response to a promotion (purchase acceleration effect). Customers who purchase more during a promotion or earlier than usual are not likely to purchase goods after the promotion has ended. Thus, a lengthening of interpurchase intervals following a promotion serves as evidence of purchase acceleration. Purchase quantity was more likely to show signs of purchase acceleration than were shorter interpurchase intervals. Results showed that consumers mostly offset their large quantity purchases by delaying their subsequent purchases for a longer period of time.
Sales promotions affect sales in complementary and competitive categories: Promotion boosts sales of both the primary product and related categories in addition to the primary product. Products from the promoted product category have a close interdependence, which suggests brand switching behaviour. Retail price promotions function as a type of implicit price bundling where the surplus from the promoted item's customers is transferred to the non-promoted items.
Growth of Sales Promotion
The main reasons for the growth of sales promotion are:
1. Increasing competition: After the implementation of economic liberalisation, a sense of change is starting to take hold. Companies are finding it harder and harder to compete on quality due to increased competition. As a result, they are turning to more creative strategies for sales promotion. For instance, Spykar Jeans holds a grand sale of up to 50% once a year to give itself a competitive edge over rivals like Levis, Pepe, Killer, and others.
2. Customers have become more sensitive towards price: Rampant inflation and the current economic downturn are directly responsible for this increased price sensitivity. Customers are price sensitive and will want to get value for their money, so if they can purchase branded jeans for half the regular price, they are likely to buy a lot of them.
3. Sales promotions generally create an immediate positive impact on sales: In comparison to sales promotion, advertising, personal selling, and other forms of promotion typically result in a slower sales response. Sales promotions typically last for a short time during a set period, creating a sense of urgency in consumers to make a purchase right away. This assists in generating an immediate boost in sales.
4. Products have become more standardized: There are numerous brands in many product categories; many of them are line extensions and "me-too" brands. Customers generally believe that brands in a given price range are more or less comparable. Due to manufacturers' inability to create truly differentiated products.
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