SALES PROMOTION
Sales promotion is one of the five aspects of the promotional mix. (The
other 4 parts of the promotional mix are advertising, personal selling,
direct marketing and publicity/ public relations.) Media and non-media
marketing communication are employed for a pre-determined, limited time
to increase consumer demand, stimulate market demand or improve
product availability. Examples include contests, coupons, freebies, loss
leaders, point of purchase displays, premiums, prizes, product samples,
and rebates
Sales promotions can be directed at the customer, sales staff,
or distribution channel members (such as retailers). Sales promotions
targeted at the consumer are called consumer sales promotions. Sales
promotions targeted at retailers and wholesale are called trade sales
promotions.
Sales promotion includes several communications activities that attempt to
provide added value or incentives to consumers, wholesalers, retailers, or
other organizational customers to stimulate immediate sales. These efforts
can attempt to stimulate product interest, trial, or purchase. Examples of
devices used in sales promotion include coupons, samples, premiums,
contests and rebates
Sales promotion is needed to attract new customers, to hold present
customers, to counteract competition, and to take advantage of
opportunities that are revealed by market research. It is made up of
activities, both outside and inside activities, to enhance company sales.
Outside sales promotion activities include advertising, publicity, public
relations activities, and special sales events. Inside sales promotion
activities includes window displays, product and promotional material
display and promotional programs such as premium awards and contests.
Sale promotions often come in the form of discounts. The two most
common discounts are price discounts (“on sale items”) and bonus packs
(“bulk items”). Price discounts are the reduction of an original sale by a
certain percentage while bonus packs are deals in which the consumer
receives more for the original price. Many companies present different
forms of discounts in advertisements, hoping to convince consumers to buy
their products.
Online deals vs. In-store deals
There are different types of discounts available online versus in the stores.
On-shelf couponing: Coupons are present at the shelf where the product is
available. * On-line couponing: Coupons are available online. Consumers
print them out and take them to the store .Although discounts can be found
online and in stores, there is a different thought process when shopping in
each location. For example, “online shoppers are more price-sensitive
because of the readily available low search cost and direct price
comparisons”. Consumers can easily go to other websites and find better
deals as opposed to physically going to various stores. In addition, buyers
tend to refrain from purchasing bonus packs online because of the
skepticism (of fraud and scams) that may come with the deal. Since
“…bonus packs are more difficult than price discounts to process online,
they are more difficult and effortful for the consumer to understand”. For
example, a buy-one-get-one-free deal on a website requires more work
than the same bonus pack offered in a store. Online, consumers have to
deal with payment processing, shipping and handling fees, and days
waiting for the products’ arrival, while in a store, the products are available
without those additional steps and delays.
Trade sales promotion techniques
Trade allowances: short term incentive offered to induce a retailer to
stock up on a product.
Dealer loader: An incentive given to induce a retailer to purchase and
display a product.
Trade contest: A contest to reward retailers that sell the most product.
Point-of-purchase displays: Used to create the urge of "impulse" buying
and selling your product on the spot.
Training programs: dealer employees are trained in selling the product.
Push money: also known as "spiffs". An extra commission paid to retail
employees to push products.
Trade discounts (also called functional discounts): These are payments to
distribution channel members for performing some function .
Impulse Buying
Impulse buying results from consumers’ failure to weigh their options
before buying a product. Impulse buying is “any purchase that a shopper
makes that has not been planned… [and is] sudden and immediate”. For
example, if a consumer has no intention of buying a product before
entering a store, but purchases an item without any forethought, that is
impulse buying. Product manufactures want to promote and encourage this
instant purchase impulse in consumers. Buyers can be very quick to make
purchases without thinking about the consequences when a product is
perceived to be a good deal. Therefore, sales companies “increasingly
implement promotional campaigns that will be effective in triggering
consumer impulse buying behavior” to increase sales and profit.
Political issues
Sales promotions have traditionally been heavily regulated in many
advanced industrial nations, with the notable exception of the United
States. For example, the United Kingdom formerly operated under a resale
price maintenance regime in which manufacturers could legally dictate the
minimum resale price for virtually all goods; this practice was abolished in
1964.
Most European countries also have controls on the scheduling and
permissible types of sales promotions, as they are regarded in those
countries as bordering upon unfair business practices. Germany is
notorious for having the strictest regulations. Famous examples include the
car wash that was barred from giving free car washes to regular customers
and a baker who could not give a free cloth bag to customers who bought
more than 10 rolls.
