What is Sales Promotion? [PDF Inside] Definition, Objectives, Strategies, Techniques, Advantages, and Disadvantages

Every business is going to find some moments when they need a boost in sales. It might be towards building a customer base, or somewhere down the line when sales are low. This time, having a toolbox of sales promotion techniques can be useful.

Sales promotion creates a positive effect on brand awareness, revenue generation, and customer satisfaction. Using promotion, a business can get rid of inventory to make room for new stuff. It is also considered a seasonal campaign to take advantage of consumer spending.

Definition of Sales Promotion:

Sales Promotion is a marketing activity that boosts sales, creates brand awareness, and increases customer loyalty. It involves offering discounts on some products or providing incentives for customers to engage with your brand.

Or

Sales promotion is a set of marketing techniques aimed at stimulating the demand for particular products, increasing brand awareness, generating new leads, and keeping existing customers engaged.

Or

A sales promotion is any type of marketing technique that involves an incentive that aims to generate interest or demand for a product.

Objectives of Sales Promotion

Followings are some important objectives of sales promotion;

1. To Introduce New Products:

The company uses sales promotion techniques while launching its new products. It helps to grab attention towards your product and create interest in the customer’s mind. Sometimes brand distributes free samples before launching, sometimes they give retailers huge incentives to keep a stock of their products.

2. To Attract New and Existing Customers:

Different techniques of sales promotion are applied at different times to encourage existing customers to buy the products. Besides that, the major objective of sales promotion is to attract new customers and make them loyal to your brand.

3. To Stabilize the Fluctuating Sales Pattern:

To tackle sales fluctuation due to seasonal effects, sales promotion helps a lot. When sale is low, brands apply sales promotions to boost sales and stabilize the situation.

4. To Increase Brand Awareness:

The other crucial objective of sales promotion is to multiply the total number of customers by increasing brand awareness.

5: Other Objectives:

• To increase product consumption
• To broaden the distribution channel
• To bring more customers into retail stores

Sales Promotion Techniques:

There are some different methods of sales promotion. Each method offers unique ways of boosting sales and connecting with customers through different techniques of sales psychology.

1. Coupons and Discounts

With a well-planned coupon campaign, a business can attract new customers, extend its reach to new markets, strengthen customer relationships, build a loyal audience, monitor promotion ROI, and track customer behavior.

Nowadays, coupons equipped with QR codes and supported by modern software are more accessible than before.

Example:

2. Product Bundle:

 Product bundles suggest a collection of products for an overall discounted rate, as opposed to purchasing the products separately. Product bundles provide customers with a reason to purchase a wider variety of products, which makes it more likely they will find a product they like and want to purchase again.

Example: With a laptop, brands offer customers to buy a keyboard and mouse at a discounted price.

3. Flash Sales:

Flash sales provide a high discount on products for a very short period of time. These sales create a sense of urgency and need around your sale. These sales can make a customer buy something immediately. Sometimes, this technique is also used to create hype among the public for a specific product.

Example: Every time a brand launches a smartphone, mostly they use flash sales to introduce their product. Sometimes, you can get huge cashback on recharging your phones, recharging DTH, paying bills, etc.

4. BOGO Promotion (buy one, get one free):

BOGO is often referred to as the self-liquidating of stocks.

Buy one, get one free is the most popular type of sales promotion. In this promotional activity, the brand provides two products together at a very reduced price for a short time. It creates a sense of urgency and boosts sales. It helps to clear stocks.

Example: A brand or e-commerce provides two dresses at the price of one. So, if you buy one product you will get another product of your choice for absolutely free.

5. Cashback Offers:

It doesn’t feel bad if someone spends money and gets a percentage of the amount they spent on that purchase. The cashback amount offered by businesses varies. You can get different cashback offers at different times. It will help to keep your customers satisfied and make them use your platform or product again.

Example: Paytm gives cashback to its users for recharging their mobile, paying bills of DTH, and paying electricity bills using their platform.

6: Free Shipping or Return:

Sometimes customers drop their idea to purchase something when they see they have to pay some extra for shipping.

75% of customers show curiosity while ordering something when they found they get a free shipping or they don’t have to pay extra money as a shipping charge. This slight loss in shipping charges causes a happy customer purchase.

Some businesses require a minimum shopping amount to avail free shipping. So, they made customers to purchase more to get free shipping.

Example: Amazon provides free shipping on your first order. Otherwise, if you order over 499 rupees, then you’ll get free shipping.

7. First Purchase Discount or Early Bird Offer:

Early bird discounts are the way of welcoming new customers. In this offer, a customer can purchase products or book services at a high discount. Sometimes they get free products or the products with zero delivery charge. Availing this offer, the company doesn’t lose a great deal of revenue.

Example:

8. Referral Discount:

Referral bonuses are the way a company pushes its existing customers to bring in new customers. This is done by providing them with actual money, cashback, offers, special discounts, and rewards. In this case, referral discount or rewards are only applied after the new customer makes a purchase.

Example: Fiverr gives its existing users $100 if they bring in a new user.

9. Free Gifts:

Free gifts are the most effective way for customers to make a purchase. Company provides some gifts if a customer makes purchase over a fixed amount.

Example:

• If anyone makes a purchase over 2000 rupees, they will get a handbag for free.
• If anyone makes a purchase over 10000 rupees, they will get a home theatre worth rs 1500.
• Buy a lucky draw ticket, 2 lucky drawers will get an iPhone, etc.

10. Incentives:

Several companies give their vendors, salesmen, and sellers incentives like- free vacations, extra money, gifts, cars, bikes, and many more when they exceed their given sales target. This motivates the vendors and sellers to sell more products and reach new markets.

Sales Promotion Strategies

It is important to be aware of best sales promotion practices, techniques, and activities that will ensure your promotions are successful.

We can divide sales promotion strategies into three broad categories:

1. Pull Strategy:

Pull strategy is the most frequently used strategy across the board for all businesses. This strategy tries to get the customer to pull the product away from the company. It involves making use of promotional techniques like BOGO, discount, schemes, flash sells, coupons, etc.

2. Push Strategy:

The push sales strategy originates from manufacturers who “push” their product via the supply chain to the consumer. Companies offer incentives, rewards, and bonuses that give each middle-carrier (distributors, retailers) motivation to convince the next person to buy the product. 

3. Hybrid Strategy:

Hybrid strategy is the combination of the push and pull strategy. For example, offer your customers discounts, coupons, gifts, cashback to drive traffic to your business. At the same time, offer your sales teams, distributors, and retailers incentives such as vacations, and extra commissions to motivate them to convince the next person to buy the product.

Advantages of Sales Promotion

There are so many advantages to running a sales promotion. Here are some of them;

1. Creating New Leads:

Sales promotion increase customer gain by offering them free products, coupons, discounts, free trials, etc. There are many potential buyers who will try something if they can purchase those for a lesser price. When they get what they want, they will definitely try those products, and if they like the experience, they will become a part of your company’s loyal base.

2. Selling Overstock:

When overstocking happens, that is the perfect time for running a sales promotion to attract new customers who don’t have the overstocked product yet. In this situation, sales promotion tools like buy one get one free, buy 2 get 1 free, huge discount, flash deal helps a lot to attract new customers and sell extra inventories.

3. Boost Sales During off Seasons:

If you have a seasonal business or your sales are getting slower day by day, then this is the best time to implement sales promotion strategies. It will help to boost your sales and clear a large amount of your inventories. It will create interest in your customer’s mind to make a purchase even after they don’t need the product then.

4. Introducing a New Product:

Sometimes, successful companies also need a little help to launch their new products because existing customers are committed to their old products and new customers may need some discounts or incentives to try those. So, you need to implement a perfect sales promotion technique to create product awareness and grab attention of your potentials.

5. Gain Valuable Insights:

Besides boosting sales, sales promotion also helps to get valuable insights into consumer’s buying habits, purchasing decisions, and which kinds of promotions they prefer the most. These informations are valuable for both your sales and marketing team.

Disadvantages of Sales Promotion

Besides several advantages, there are some disadvantages too;

1. Devaluate Your Brand:

There is a general assumption in the market that when a brand getting trouble selling a product, they go for sale. Sometimes this assumption doesn’t justify your brand.

2. Customer’s Expectation Increases:

If you run too many promotions, customers always expect discount from you and they only buy your products only when your product is on discount. Sometimes, customers shift to another brand when you stop giving discounts.

3. Promotional Trap:

Sometimes you get caught in a “sales promotion trap” where the only way to sell your product is to provide huge discounts. Besides that, what happens is you get trapped in a cycle where you’re forced to invest in a short-term discounting strategies, at the expense of long-term growth.