7.1 Sales promotion as a communication tool
Sales promotion includes short-term incentives to encourage the purchase of a product or a service.
Today, the shift in communication expenditures from advertising to sales promotion is obvious. It is a consequence of changing buying behaviour, advertising overload and processes that have resulted from globalisation, concentration, and diversification in business.
Sales promotion includes tools that encourage and stimulate the consumer decision-making process. It consists of short-term incentives that directly support buying behaviour and improves the effectiveness of business intermediaries. Whereas advertising offers reasons to buy a product, sales promotion offers solutions that would achieve immediate sales. It seeks to motivate the customer to buy now.
The objectives of sales promotion should comply with the objectives of the company’s communication. The main objectives of sales promotion include sales growth, market share growth and profit growth.
The general objectives of sales promotion to raise the interest to try new products at the moment of purchase to increase the level of product awareness, to deepen the knowledge about a product’s attributes to acquire new customers to offer a complimentary gift or incentive (and to encourage immediate purchase) to get the customer interested in a product (expectation of experience, try the fortune, show the knowledge, abilities – contests, lotteries) to increase clearance sales (price reductions, discounts) to improve the selling efforts of resellers
7.2 The basic forms of sales promotion
Sales promotion can be classified according to target groups: trade promotion (retailers, wholesalers) consumer promotion (final consumers) sales force promotion (sales force)
The sales promotion tools are characterized by the: price reductions (price sales promotion) or improvement of the advantage (non-price sales promotion)
Trade promotion Objectives for trade promotion include: motivating resellers to carry new products and more stock; inducing them to promote the products and give them more shelf space.
Trade promotion tools price discounts price-off or free goods depending on the quantity sold advertising, special displays at the point of sale sales contests – rewards for increased sales promotional information materials, advertising allowance advertising specialities (pens, mugs, calendars, etc.) refunds
Consumer promotion Consumer promotion is used to increase short-term sales, help build long-term market share, hold loyal customers and encourage customers to buy products that are in the maturity stage.
Consumer promotion tools free samples coupons premiums - goods offered either free or at a low cost as an incentive to buy a product discounts, price packs (e.g. BOGOF=buy 1 get 1 free), patronage rewards (for regular use of a certain product) competitions, sweepstakes, lotteries advertising specialities (articles with the company’s name that are given as gifts – pens, calendars, caps, mugs…) sampling and product demonstration at the point of purchase
Other tools include additional services such as free transportation, free trials, multifunctional packages, extended guarantees, specialty containers (e.g. cosmetics in a Christmas package).
A continuity program is another specific tool that is used mostly by retailers to improve customer loyalty. Customers – holders of customer cards - receive special discounts or other services, and at the same time retailers receive detailed information about their customers thanks to the use of electronic media at the point of purchase.
Sales force promotion It is designed to motivate the sales force (internal and external) and business partners.
sales contests – to increase the selling efforts over a given period (trips, cash prizes, other gifts) business meetings – sharing know-how and experience advertising specialities selling and advertising tools (printed materials, samples, demonstration models)
All types of sales promotion can be combined. However, they should be blended smoothly with other promotional activities within the company’s overall integrated marketing communication effort.
A modern trend in promotion is cooperative promotion – various brands within a company or related non-rival products from different producers are promoted together.