What are sales promotions?
Sales promotion refers to tactics aimed at directly increasing sales.
Sales promotion refers to the totality of all activities that are intended to increase sales. The activities are tactics that support the overall goal. Sales promotions techniques are limited in time and can have a variety of design options. From classic advertising as well as field promotion to trade and point-of-sale POS marketing.
Sales promotion & marketing
Isn’t every marketing activity a sales promotion? Yes and no. In the long run, every marketing strategy has the goal of maximizing sales and profits. However, there are common sub-goals such as increasing awareness or branding. Branding or creating and maintaining a marketing image are long-term actions.
In some cases, sales promotions and marketing objectives can even compete with each other. For example, a price promotion is a tactic for short-term sales incentives. However, this discount promotion can lower the customer’s valuation, so that the customer is no longer willing to pay the full price. The perceived value of the product or service decreases. This is also known as a negative spillover effect.
Different types of sales promotion
Basically, there are three types of sales promotion, some of which have subcategories.
The sales promotion measures of the trade promotion refer to actions that take place directly in the shop: Trade marketing, POS actions, or cost takeovers. A challenge here is to comply with the brand specifications and also principles of advertising. To some extent, responsibilities are handed over to the retailer.
The retailer himself has the possibility to implement these measures. The manufacturer can often only define the framework conditions.
Examples of trade promotion
- The manufacturer takes over the advertising costs of the retailer. GEO marketing measures can be implemented, for example, to bring more customers into the store. If these actions are related to a direct product this is a win-win situation. Advertising messages such as “Treat yourself now to an ice-cold refreshment at X around the corner”.
- Promotional flyers, or posters at the point-of-sale: product promotions in the checkout area, or post-purchase marketing materials such as receipt advertising or catalogs are possible tactics.
- Shopping cart ads
Consumer sales promotion
Consumer promotion directly targets the buying behavior of the end consumer. The most common tactic is discount promotions to increase sales volumes in the short term. The consumer sales promotion is divided into two subcategories: Retail and end consumer promotions.
In consumer-retailer promotions, sales promotion activities are used that are directly related to the retailer and the end consumer. Whereas in the case of trade promotions (see above) there is no direct link between sales and the retailer, for example, if a customer buys the product from another retailer after receiving an advertising message or flyer, there is no direct temporal and geographical link. Retail promotions are only happening at the store itself.
Examples of retailer promotion
- Special offers to create a sense of urgency and incentive: Offer a discount of 10%, buy one get one free, flash sale
- Free samples
- Trade marketing: positioning of items in a better view of customers. Companies can give specifications where their product must be arranged in a certain way for the retailer to have the right to sell the item.
- New product presentations: A retailer can be granted a special product launch. A new game console can be tested at a retailer. A new cell phone can be tested at a retailer first.
- Artificial scarcity to create a sense of urgency or exclusivity
End consumer promotions
End consumer promotions are implemented directly by the manufacturer and in some cases can be done without a retailer at all. These sales promotions address the end consumer directly.
Nevertheless, retailers are often involved or benefit from the techniques as they represent an incentive to purchase, which in turn is often made at retailers.
Examples of consumer promotion
- Loyalty programs (manufacturer vs retailer: retailers often have their own loyalty programs.)
- Cash-back promotions: When a product is registered with the manufacturer, the consumer is refunded a certain value. Manufacturers used this mainly to gather data about customers, as this data often resides with the retailer.
- Collective promotions or sweepstakes
Sales force promotion
Field sales reps are a powerful tool to boost sales. Sometimes manufacturers hold sales force promotions – especially at the end of a quarter or fiscal year – to meet sales targets. Sales Development Representatives, who often earn less and are early in their careers, can also be involved.
This type of sales promotion does not normally fall within the marketing mix.
Not all offers are monetary, however. Some are aimed at status or even career development.
Examples of sales force promotions
- Sales force competitions with status and monetary prizes
- Bonuses or other incentives for additional sales
- Training and education
- Promotions or access to other markets or product categories, e.g. sales reps have certain products excluded from the range they sell in a particular market (geographic but also firmographic customer segmentation)
- Upsell deals: Create special bundles or discounts for existing customers