sales promotion
   HOME

TheInfoList



OR:

Sales promotion is one of the elements of the promotional mix. The primary elements in the promotional mix are
advertising Advertising is the practice and techniques employed to bring attention to a product or service. Advertising aims to put a product or service in the spotlight in hopes of drawing it attention from consumers. It is typically used to promote a ...
,
personal selling Personal selling occurs when a sales representative meets with a potential client for the purpose of transacting a sale. Many sales representatives rely on a sequential sales process that typically includes nine steps. Some sales representatives ...
,
direct marketing Direct marketing is a form of communicating an offer, where organizations communicate directly to a Target market, pre-selected customer and supply a method for a direct response. Among practitioners, it is also known as ''direct response m ...
and
publicity In marketing, publicity is the public visibility or Brand awareness, awareness for any Product (business), product, Service (economics), service, person or organization (company, Charitable organization, charity, etc.). It may also refer to the mov ...
/
public relations Public relations (PR) is the practice of managing and disseminating information from an individual or an organization (such as a business, government agency, or a nonprofit organization) to the public in order to influence their perception ...
. Sales promotion uses both media and non-media marketing communications for a pre-determined, limited time to increase consumer demand, stimulate market demand or improve product availability. Examples include
contest Contest may refer to: * Competition Competition is a rivalry where two or more parties strive for a common goal which cannot be shared: where one's gain is the other's loss (an example of which is a zero-sum game). Competition can arise b ...
s,
coupon In marketing, a coupon is a ticket or document that can be redeemed for a financial discounts and allowances, discount or rebate (marketing), rebate when purchasing a product (business), product. Customarily, coupons are issued by manufacturers ...
s, freebies,
loss leader A loss leader (also leader) is a pricing strategies, pricing strategy where a product is sold at a price below its market cost to stimulate other sales of more profitable goods or services. With this sales promotion/marketing strategy, a "leader" i ...
s,
point of purchase The point of sale (POS) or point of purchase (POP) is the time and place at which a retail transaction is completed. At the point of sale, the merchant A merchant is a person who trades in Commodity, commodities produced by other people, e ...
displays, premiums,
prizes A prize is an award An award, sometimes called a distinction, is something given to a recipient as a token of recognition of excellence in a certain field. When the token is a medal A medal or medallion is a small portable artistic ...
, product samples, and rebates. Sales promotions can be directed at either the
customer In sales, commerce, and economics, a customer (sometimes known as a :wikt:client, client, buyer, or purchasing, purchaser) is the recipient of a Good (economics), good, service (economics), service, product (business), product or an Intellectual p ...
, sales staff, or distribution channel members (such as
retailer Retail is the sale of goods and Service (economics), services to consumers, in contrast to wholesaling, which is sale to business or institutional customers. A retailer purchases goods in large quantities from manufacturing, manufacturers, dire ...
s). Sales promotions targeted at the
consumer A consumer is a person or a group who intends to order, or uses purchased goods, products, or Service (economics), services primarily for personal, social, family, household and similar needs, who is not directly related to entrepreneurial or bu ...
are called consumer sales promotions. Sales promotions targeted at retailers and
wholesale Wholesaling or distributing is the sale of goods or merchandise to retailers; to industrial, commercial, institutional or other professional business users; or to other wholesalers (wholesale businesses) and related subordinated services. I ...
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, point-of-purchase (POP) displays, contests, rebates, and sweepstakes. Sales promotion is implemented 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 include 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. Discounts impact the way consumers think and behave when shopping. The type of savings and its location can affect the way consumers view a product and affect their purchase decision. 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 Advertising is the practice and techniques employed to bring attention to a product or service. Advertising aims to put a product or service in the spotlight in hopes of drawing it attention from consumers. It is typically used to promote a ...
, hoping to convince consumers to buy their products.


Sales promotion: definition

Sales promotion represents a variety of techniques used to stimulate the purchase of a product or brand. Sales promotion has a tactical, rather than strategic role in marketing communications and brand strategy, it is also a form of advertisement used within a short period of time. Researchers Farhangmehr and Brito, reviewed the definitions of sales promotions in marketing texts and journals and identified a set of common characteristics of sales promotion, including: * Short-term effects and duration; * Operates and influences only the last phase of the purchase process; * Exhibits a secondary role in relation to other forms of marketing communication; * Performs an accessory role regarding the products core benefits * Is not a single technique, rather it is a set of techniques used for a specific purpose Both manufacturers and retailers make extensive use of sales promotions. Retailer-sponsored sales promotions are directed at consumers. Manufacturers use two types of sales promotion, namely:Gedenek, K., Geslin, S.A. and Ailawadi, S.L., "Sales Promotion," in: Krafft, M. and Mantra, M.K. (eds), ''Retailing in the 21st Century: Current and Future Trends,'' pp.345-359 :1. ''Consumer sales promotions'': Sales promotions targeted at consumers or end-users and designed to stimulate the actual purchase :2. ''Trade promotions'': Sales promotions targeted at trade, especially retailers, designed to increase sales to retailers, to carry the product or brand or to support the retailer in consumer-oriented promotions *Sales promotion is useful when:-1. The product is newly introduced. 2. There are huge stock lying unsold. 3. Penetration or entry is desired in marketing under competitors stronghold. 4. The product are likely to be perished if not sold or used. 5. The effect of sales promotion must be fortified by marketing backup to create brand loyalty resulting in growing demand.


Consumer sales promotion types

Consumer sales promotions are short-term techniques designed to achieve short-term objectives, such as to stimulate a purchase, encourage store traffic or simply to build excitement for a product or brand. Traditional sales promotions techniques include: *Price deal: A temporary reduction in the price, such as 50% off. *Loyal Reward Program: Consumers collect points, miles, or credits for purchases and redeem them for rewards. *Cents-off deal: Offers a brand at a lower price. The price reduction may be a percentage marked on the package. *Price-pack/Bonus packs deal: The packaging offers a consumer a certain percentage more of the product for the same price (for example, 25 percent extra). This is another type of deal “in which customers are offered more of the product for the same price”. For example, a sales company may offer their consumers a bonus pack in which they can receive two products for the price of one. In these scenarios, this bonus pack is framed as a gain because buyers believe that they are obtaining a free product. The purchase of a bonus pack, however, is not always beneficial for the consumer. Sometimes consumers will end up spending money on an item they would not normally buy had it not been in a bonus pack. As a result, items bought in a bonus pack are often wasted and is viewed as a “loss” for the consumer. *Coupons: Coupons have become a standard mechanism for sales promotions. *
Loss leader A loss leader (also leader) is a pricing strategies, pricing strategy where a product is sold at a price below its market cost to stimulate other sales of more profitable goods or services. With this sales promotion/marketing strategy, a "leader" i ...
: The price of a popular product is temporarily reduced below cost in order to stimulate other profitable sales * Free-standing insert (FSI): A coupon booklet is inserted into the local newspaper for delivery. * Checkout dispensers: On checkout, the customer is given a coupon based on products purchased. * Mobile couponing: Coupons are available on a mobile phone. Consumers show the offer on a mobile phone to a salesperson for redemption. * Online interactive promotion game: Consumers play an interactive game associated with the promoted product. * Rebates: Consumers are offered a money-back if the receipt and
barcode A barcode or bar code is a method of representing data in a visual, Machine-readable data, machine-readable form. Initially, barcodes represented data by varying the widths, spacings and sizes of parallel lines. These barcodes, now commonly refe ...
are mailed to the producer. * Contests/sweepstakes/games: The consumer is automatically entered into the event by purchasing the product. * Point-of-sale displays: ** Aisle interrupter: A sign that juts into the aisle from the shelf. ** Dangler: A sign that sways when a consumer walks by it. ** Dump bin: A bin full of products dumped inside. ** Bidding portals: Getting prospects ** Glorifier: A small stage that elevates a product above other products. ** Wobbler: A sign that jiggles. ** Lipstick Board: A board on which messages are written in crayon. ** Necker: A coupon placed on the 'neck' of a bottle. ** YES unit: "Your extra salesperson" is a pull-out
fact sheet A factsheet, fact sheet or fact file is a single page document containing essential information about a Product (business), product, Chemical substance, substance, Service (economics), service or other topic. Factsheets are frequently used to provid ...
. ** Electroluminescent: Solar-powered, animated light in motion. * Kids eat free specials: Offers a discount on the total dining bill by offering 1 free kids meal with each regular meal purchased. * Sampling: Consumers get one sample for free, after their trial and then could decide whether to buy or not. New technologies have provided a range of new opportunities for sales promotions. Loyalty cards, personal shopping assistants, electronic shelf labels, and electronic advertising displays allow for more personalized communications and more targeted information at the point of purchase. For example, shoppers may receive alerts for special offers when they approach a product in a specific aisle.


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.


Consumer thought process


Meaningful savings: gain or loss

Many discounts are designed to give consumers the perception of saving money when buying products, but not all discounted prices are viewed as favorable to buyers. Therefore, before making a purchase, consumers may weigh their options as either a gain or a loss to avoid the risk of losing money on a purchase. A “gain” view on a purchase results in chance taking For example, if there is a buy-one-get-one-half-off discount that seems profitable, a shopper will buy the product. On the other hand, a “loss” viewpoint results in consumer aversion to taking any chances. For instance, consumers will pass on a buy-three-get-one-half-off discount if they believe they are not benefitting from the deal. Specifically, consumers will consider their options because “…the sensation of loss is 2.5 times greater than the sensation of gain for the same value”.


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… nd issudden 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 was 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 profits


Comparing prices

Many consumers read left-to-right, and therefore, compare prices in the same manner. For example, if the price of a product is $93 and the sales price is $79, people will initially compare the left digits first (9 and 7) and notice the two digit difference. However, because of this habitual behavior, “consumers may perceive the ($14) difference between $93 and $79 as greater than the ($14) difference between $89 and $75”. As a result, consumers often mistakenly believe they are receiving a better deal with the first set of prices based on the left digits solely.


Right digit effect

The right digit effect focuses on the right digits of prices when the left digits are the same. In other words, prices like $45 and $42 force consumers to pay more attention to the right digits (the 2 and 5) to determine the discount received. This effect also “implies that consumers will perceive larger discounts for prices with small right digit endings, than for large right digit endings. For example, in a $32-to-$31 price reduction, consumers will believe to have received a greater deal than a $39-to-$38 price reduction. As a result, companies may use discounts with smaller right digits to mislead consumers into thinking they are receiving a better deal and increasing profit. However, consumers also are deceived by the infamous 9-ending prices. “The right digit effect lsorelates to consumers’ tendency to identify 9-ending prices as sale (rather than regular) prices or to associate them with a discount.


Framing effect

The Framing effect is “the phenomenon that occurs when there is a change in an individual’s preference between two or more alternatives caused by the way the problem is presented”. In other words, the format in which something is presented will affect a person's viewpoint. This theory consists of three subcategories: risky choice framing, attribute framing and goal framing. Risky choice framing references back to the gain-or-loss thought processes of consumers. Consumers will take chances if the circumstance is profitable for them and avoid chance-taking if it is not. Attribute framing deals with one key phrase or feature of a price discount that is emphasized to inspire consumer shopping. For example, the terms “free” and “better” are used commonly to lure in shoppers to buy a product. Goal framing places pressure on buyers to act hastily or face the consequences of missing out on a definite price reduction. A “limited time only” (LTO) deal, for example, attempts to motivate buyers to make a purchase quickly, or buy on impulse, before the time runs out.


Outside forces

Although there are aspects that can determine a consumer's shopping behavior, there are many outside factors that can influence the shoppers’ decision in making a purchase. For example, even though a product's price is discounted, the quality of that product may dissuade the consumer from buying the item. If the product has poor customer reviews or has a short “life span,” shoppers will view that purchase as a loss and avoid taking a chance on it. A product can also be viewed negatively because of consumers’ past experiences and expectations. For example, if the size of a product is misleading, buyers will not want to buy it. An item advertised as “huge,” but is only one inch tall, will ward off consumers. Also, “the effects of personal characteristics, such as consumers’ gender, subjective norms, and impulsivity” can also affect a consumer's purchase intentions. For example, a female will, generally, purchase a cosmetic product more often than a male. In addition, “some…shoppers may be unable to buy productbecause of financial constraints”.


Regulation

Sales promotions have traditionally been heavily regulated in many advanced industrial nations, with the notable exception of the
United States The United States of America (U.S.A. or USA), commonly known as the United States (U.S. or US) or America, is a country Continental United States, primarily located in North America. It consists of 50 U.S. state, states, a Washington, D.C., ...
. For example, the
United Kingdom The United Kingdom of Great Britain and Northern Ireland, commonly known as the United Kingdom (UK) or Britain, is a country in Europe, off the north-western coast of the European mainland, continental mainland. It comprises England, Scotlan ...
formerly operated under a
resale price maintenance Resale price maintenance (RPM) or, occasionally, retail price maintenance is the practice whereby a manufacturer Manufacturing is the creation or Production (economics), production of goods with the help of equipment, Work (human activity) ...
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 Germany,, officially the Federal Republic of Germany, is a country in Central Europe. It is the second most populous country in Europe after Russia, and the most populous member state of the European Union. Germany is situated between ...
is notorious for having the most strict 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.


See also

*
Alcohol advertising Alcohol advertising is the promotion Promotion may refer to: Marketing * Promotion (marketing), one of the four marketing mix elements, comprising any type of marketing communication used to inform or persuade target audiences of the relativ ...
* Behavioral clustering *
Demand chain The term demand chain has been used in a business and management context as contrasting terminology alongside, or in place of, "supply chain". Madhani suggests that the demand chain "comprises all the demand processes necessary to understand, creat ...
*
Integrated marketing communications Marketing Communications (MC, marcom(s), marcomm(s) or just simply communications) refers to the use of different marketing channels and tools in combination.Tomse, & Snoj, 2014 Marketing communication channels focus on how businesses communicate ...
* Institute of Sales Promotion *
Marketing Marketing is the process of exploring, creating, and delivering value to meet the needs of a target market in terms of goods and services; potentially including selection of a target audience; selection of certain attributes or themes to empha ...
*
Marketing communications Marketing Communications (MC, marcom(s), marcomm(s) or just simply communications) refers to the use of different marketing channels and tools in combination.Tomse, & Snoj, 2014 Marketing communication channels focus on how businesses communicate ...
*
Pricing Pricing is the Business process, process whereby a business sets the price at which it will sell its products and services, and may be part of the business's marketing plan. In setting prices, the business will take into account the price at wh ...
*
Promotion (marketing) In marketing, promotion refers to any type of marketing communications, marketing communication used to inform target audiences of the relative merits of a product, service, brand or issue, most of the time persuasive in nature. It helps marketers ...
* Promotional mix *
Promotional merchandise Promotional merchandise are product (business), products branded with a logo or slogan and distributed at little or no cost to promotion (marketing), promote a brand, corporate identity, or event. Such products, which are often informally called ...
*
Native advertising Native advertising, also called sponsored content, is a type of advertising Advertising is the practice and techniques employed to bring attention to a product or service. Advertising aims to put a product or service in the spotlight in ...
* Sales Promotion (magazine) *
Tobacco advertising Nicotine marketing is the marketing of nicotine-containing products or use. Traditionally, the tobacco industry markets cigarette tobacco smoking, smoking, but it is increasingly marketing other products, such as electronic cigarettes and heated ...


References

{{Authority control