Sales promotion

A sale is being promoted in the shop window

Sales promotions aim to provide a short-term boost to sales. Straightforward price cuts are one option, but other promotional tactics such as tie-ins, free gifts and loyalty schemes can also be used effectively

What is sales promotion?

The most straightforward sales promotion activities are price reductions. These include special offers, money-off vouchers, buy-one-get-one-free (BOGOF) deals or 20% extra free, giving the customer more for their money.

But sales promotion are limited only by your imagination. For example, you could run a competition to draw attention to your product. Free gifts also work well as a sales promotion technique: the trick is to find a promotional gift that is cost-effective but at the same time attracts customers.

A related sales promotion activity is to create a tie-in with another product (such as a new movie), or a good cause. Longer-term, loyalty schemes can help retain customers and boost sales.

Merchandising activities for sales promotion

Most sales promotion activity is focused on the places 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 over a competitor's brand.

As well as point-of-sale displays, other merchandising options include encouraging retailers to give your products more shelf space, or offering specially packaged promotional products such as Christmas gift sets.

Sales promotion and field marketing

For added impact, you can send in your own field marketing people to help retailers sell your products. You could run a demonstration of your product in a store or at a promotional event. If you cannot provide your own staff, you could outsource activities like this to a field marketing agency.

Another alternative is to aim your sales incentive at the intermediary rather than 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 both.

Sales promotion risks

Although individual sales promotions are short-term, tactical activities, they can raise important strategic issues. Clear sales promotion objectives can help you understand which ideas will work for you, and how they fit with other marketing activities such as advertising and SEO.

Although 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 products for the price of one.

Unless promotional activities attract new customers, or increase customer loyalty, the overall effect may be to reduce profits. So while sales promotion can work well for new product launches, there are risks when promoting 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, an attractive customer loyalty scheme could strengthen your image and provide useful data on your customers' purchasing behaviour.

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