Definition
Sales promotion consists of a diverse collection of incentive tools, mostly short term, designed to stimulate quicker and/or greater purchase of particular products/services by consumers or the trade.
Advertising offers a reason to buy. Sales promotion offers an incentive to buy. Sales promotion tools for consumer promotion include cash refund offers, prices off, prizes, patronage rewards etc. Sales promotion tools for trade promotion include prices off, advertising and display allowances and free goods based on sales. Sales promotion tools aimed at salesmen of the company are contests, incentives for sales in fixed periods, trips to tourist locations etc.
Rapid Growth of Sales Promotion
In comparison to growth in advertising sales promotion has grown more rapidly and in many consumer packaged goods company it now accounts for 65% to 75% of the total budget (Kotler, 1997).
Purposes of Sales Promotion
Free sample stimulates consumer trial and some of the consumers may feel good and start purchasing. A free advisory in any activity may help some persons and they may come to the advisory firm in future. Incentive to buy increase the rates of use by occasional users and attract new triers. Incentives could be used as rewards to loyal customers also.
Incentive type promotions are used to attract new buyers or triers, to reward loyal customers, and to increase the repurchase rates of occasional users.
Trade allowance help in getting retailer shelf space for small companies.
Farris and Quelch in their Sloan Management Review article "In Defense of Price Promotion" (Fall 1987, pp. 63-69) argued that price promotion provides number of benefits that are important for manufacturers. They enable manufacturers to adjust to short-term variations in supply and demand through price mechanism. During tight supply times, they allow manufacturers test how high a list price they can charge, because later on they can always discount it. They provide consumers an occasion to switch from their current brand or product category and thus find out the attributes and benefits of other options available in the market. They help the manufacturers to offer different prices to different segments of the target market. They also help making consumers feel smart by searching and taking advantage of special price and discount offers.
But, there is risk in putting a well-known brand leader on promotion more than 30% of the time.
Major Decisions in Sales Promotions
Setting the objectives
Selecting the tools
Developing the sales promotion program
Pretesting the program
Implementing and controlling the program
Evaluating the Results of the program
Advertising Specialties
Cash refund offer
2. Contests
3. Coupons
4. Game
Novelty
Patronage reward
Point of Purchase Promotion
(Source: http://businessperspectives.org/journals_free/im/2008/im_en_2008_1_Fam.pdf)
Sales Promotion Methods - A Listing
Advertising Specialties
Cash refund offer
2. Contests
3. Coupons
4. Game
Novelty
Patronage reward
Point of Purchase Promotion
(Source: http://businessperspectives.org/journals_free/im/2008/im_en_2008_1_Fam.pdf)
References
Philip Kotler, Marketing Management (Basic text for revision articles)
Kotler, Philip (1997), Marketing Management, Ninth Edition, p.662.
Related Knols
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Marketing articles are available under the label http://nraomtr.blogspot.com/search/label/Marketing%20Management
Article on differentiating and positioning http://nraomtr.blogspot.com/2011/11/marketing-strategy-differentiating-and.html
Article on differentiating and positioning http://nraomtr.blogspot.com/2011/11/marketing-strategy-differentiating-and.html
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