Objectives of a Sales Promotion
Sales promotion is one of the many tools used in a retailer’s promotional mix. Sales promotional tactics include contests, coupons, freebies, loss leaders, point-of-purchase displays, premiums, prizes, product samples, and rebates. Sales promotion may be referred to as "below the line" or "point of sale." For example, price reductions at the cash register or complimentary gifts with purchases all fall under sales promotional tactics. The objectives of a sales promotion is to increase consumer demand, stimulate market demand, to get potential buyers to heed a call to action, increase the size of purchases and improve product availability using media and non-media marketing communications. Figure 1
Sales Promotion Techniques
Sales promotions can be directed to consumers, sales employees, or other retailers. Sales and coupons are some of the most common sales promotion tactics to stimulate interest and encourage consumers to purchase products. Reward programs focus on customer retention and repeat purchases, awarding customers points, miles, or credits for purchases and future redemptions. Besides price reduction and loyalty programs, point-of-purchase displays are a common tactic used by brands to prompt "impulse" customer purchases. For example, chewing gum and candy are often placed next to the register to increase sales of those products.
Other promotional tools include coupon booklets, mobile couponing, on-shelf couponing, as well as product signage and packaging, which are strategically placed to encourage immediate customer sales. For new marketing initiatives, brands implement retail "mechanics" such as “Buy One, Get One Free” Or “Three for Two” promotions to encourage consumers to buy new market releases.
- Trade allowances - Short-term incentives offered to retailers to stock up on a product.
- Dealer loaders - Incentives used to persuade retailers to purchase and display a product.
- Trade contests - Contests used to reward retailers that sell the largest quantity or highest units of a brand’s product.
- Training programs - Training instructing dealer employees in selling the brand’s product.
- Push money (also known as "spiffs") - Extra commission paid to retail employees to push products.
- Trade discounts (also called functional discounts) - Payments to distribution channel members for performing certain functions.