Sales promotion aims to provide a short-term boost to sales. While a straightforward price cut is one option, sales promotion looks for alternatives that are more cost-effective - costing less to implement but providing a bigger increase in sales.
The most straightforward forms of sales promotions are different variations on price reductions. A new magazine launch can be promoted with a low-cost first issue. Money-off coupons in the press or online can be used to encourage purchases. Sales promotions such as buy-one-get-one-free (BOGOF) or 20% extra free give the customer more for their money. Sales promotion can also use more subtle forms of price discounting, such as offering free financing.
More creative kinds of sales promotion are limited only by your imagination. For example, you might run some form of competition to draw attention to your product. Free gifts can work well: the trick is to find a gift that is inexpensive but at the same time attracts customers. A related form of sales promotion is based on a tie-in with another product (such as a new movie) or a good cause. Longer-term, loyalty programmes (for example buy five and get the sixth free) can help retain customers and boost sales.
Another category of sales promotion focuses on outlets where your product is sold. Visual merchandising displays aim to make your product more visible, encouraging consumers to make an impulse purchase or to choose your brand rather than a competitor. As well as point-of-sale displays, merchandising options include encouraging retailers to devote more shelf space to your products or offering specially packaged products (for example Christmas gift sets).
For added impact, you might want to send your own field marketing people to help retailers. For example, you might run a demonstration of your product in a store or at an event. If you cannot provide your own staff, you might outsource activities like this to a field marketing agency.
Another alternative is to aim your sales promotion at the intermediary rather than at the end-customer. For example, you could offer a short-term discount to retailers, or free branded goods for sales staff. Many sales-promotion ideas can be adapted to target the trade instead of consumers, or perhaps both.
Although individual sales promotions are short-term, tactical activities, sales promotion can raise important strategic issues. Clear objectives can help you understand which sales promotion ideas will work for you and how they fit with other marketing activities such as advertising.
Although variations of price cuts may increase sales, they also shrink margins. Short-term sales increases may be at the expense of future sales — for example if customers have bought two for the price of one. Unless sales promotions attract new customers, the overall effect may be to reduce profits. So while sales promotion can work well for new product launches, there are more risks with existing products.
You should also think carefully about how sales promotions affect your brand. Regular price discounting or a poor quality free gift might devalue your brand. On the other hand, a well-planned loyalty scheme could both strengthen your image and provide you with useful data on your customers' purchasing behaviour.
Popular content on running a sales promotion:
Find more articles, videos and tools in the Resources box.