Sales promotion – what is it?
We explain, What is sales promotion?, we discuss its role and outline the benefits it can bring to your business!
Sales promotion is a marketing technique designed to increase sales volume relatively quickly. It includes, amongst other things,. promotional and audiotext lotteries, bonus sales or competitions. Among these, the most common techniques involve offering added value alongside the promoted product and the chance to take part in prize draws.
Sales promotion. What is sales promotion?
Sales promotion It is a widely used technique, but researchers have still not agreed on a single definition of the concept. In the literature on the subject, there are more than a dozen definitions of sales promotion proposed by various authors. However, after analysing the available options, it is possible to identify three main characteristics that recur in the proposed descriptions. Sales promotion involves:
- Short-term nature.
- Immediate effects in business practice.
- The impact associated with adding value to the core product offering, which influences how consumers perceive that product.
Techniques aimed at different audiences are extremely varied, depending on the choice of market applications.
Polish and international literature also refer to sales promotion using other terms. Alternatively, it is known as, amongst other things, sales activation, supplementary promotion, sales promotion or an additional promotion. In practice, all these terms refer to the same concept.
The concept of sales promotion appeared in Polish discourse in the late 1970s. Until then, the English equivalent had been commonly used, namely sales promotion. This term had a broad range of meanings, as it was also understood to refer to a set of activities that generate sales, rather than merely those that lead to an increase in sales.
According to Philip Kotler (*Marketing: Analysis, Planning, Implementation, Control*, 1994), the term „sales promotion” derives from the Latin word promote (to develop, to promote) and refers to a set of activities undertaken with the aim of presenting a product and encouraging buyers to purchase it.
Many researchers examining this issue agree that the emphasis should be placed on the limited duration of sales promotions. It is therefore intended only to boost sales of a specific product or service in the short term. This enables it to generate optimal results immediately. This principle is also emphasised in the definitions of the concept, according to which it is a marketing technique whose effects are felt after only a short time.
Another important feature of sales promotion is its impact on consumers. It is intended to change the perception of the products being promoted. The associated activities and measures enhance the appeal of the offer, thereby making buyers more inclined to make a purchase. This effect can be achieved, amongst other things, by offering added value and highlighting it as an incentive to purchase a product or service.
To summarise the analysis of how the concept of sales promotion is defined, five key characteristics can ultimately be identified. These are:
1) short-term nature,
2) immediate results (increased sales),
3) an immediate impact on buyers,
4) adding value to the product,
5) the variety of promotional techniques used in business practice.
The role of sales promotion
Sales promotions are an expensive but very popular form of marketing communication with consumers. Due to:
- the role it plays in the marketing strategy,
- the high expenditure incurred by companies on organisation,
It is an extremely important element of the promotional mix.
Sales promotion is a set of short-term activities which, by adding value to a product or reducing its price, help to increase sales. These effects are made possible by increased consumer interest and a greater willingness to buy, resulting from the product’s growing appeal.
This definition shows that Sales promotions are used to increase the volume of sales of a product. Consumers purchase the promoted product as a result of various demand factors. Thanks to the promotion, sales increase because certain determinants come into play. These include the behaviour of loyal brand customers and four determinants known as demand factors, namely:
- an increase in consumption levels,
- an increase in the number of buyers,
- stocking up,
- change of point of sale.
The role of sales promotions in marketing studies
Sales promotion is part of promotion (the fourth P), which is one of the main pillars of marketing theory and practice. Advertising, personal selling, merchandising, sponsorship, public relations and sales promotion are all informational tools within a company’s system of communication with the market. In the specialist literature, sales promotion is increasingly referred to as a component of the promotional mix. This does not, however, mean that it can replace any of its other elements. It should not be used instead of, or in isolation from, them. It influences the propensity to choose an offer among sales representatives and buyers alike. It usually adds a special incentive, depending on the promotional technique currently being used. Sales promotion measures must have only a short duration of effect, as otherwise they would become a permanent feature of the offer.
Sales promotion techniques
A wide variety of promotional techniques have been developed, but they can be grouped into six clear categories.
Price reductions
Price reductions are situations in which a buyer can purchase a promoted product for less. They may take effect immediately or be spread out over time. The first option means that the purchase can be made for the lowest possible price. The second, however, guarantees a partial refund at a later date. A price reduction can take various forms. It may apply to a single product or to a larger group. Prices, on the other hand, are reduced either unconditionally or only once certain requirements have been met.
Free product samples
Free product samples are a rather unusual sales promotion technique, as in a sense they challenge the very definition of sales promotion. This is because, rather than persuading consumers to make an immediate purchase, they first encourage them to try the product out.
Bonuses and gifts
Bonuses and gifts encourage purchases by supplementing the standard offer with free added value. Bonuses include any items that are in some way related to the promoted product (e.g. a special reusable box included with washing powder). Gifts, on the other hand, are any items that are not particularly related to the promoted product (e.g. a soft toy included with a packet of tea).
Competitions, prize draws, games
Competitions, prize draws and games encourage customers to purchase the promoted product, as they offer the chance to win a valuable prize. Winning depends either on chance or on the skill of the participant in the sales promotion. These techniques are described in detail in view of the legal and tax obligations incumbent on organisers and participants.
Special offers
Special offers usually apply to fast-moving consumer goods and are linked to public holidays or special occasions. Gift sets or special packaging give a product a distinctive character, thereby attracting attention and encouraging people to buy.
Point-of-sale displays
Point-of-sale displays make it easier for customers to access the product, which boosts sales. This technique is often combined with other sales promotion techniques to enhance or accelerate their effectiveness.
Classification of sales promotions by target group
Classification of sales promotions by target group It is a very important classification criterion in marketing practice. The most common distinction is between techniques aimed at individual consumers or business customers, as well as business promotion techniques. The first group includes, amongst other things, samples, vouchers, bonuses, competitions and discounts. The second group includes: price reductions, free products, demonstrations, promotional items, subsidies, sales competitions, etc. This division stems from the organisation’s objectives.
Classification of sales promotions by their impact on price
The classification of sales promotion techniques may also relate to their impact on the price of the promoted product. A distinction is therefore made between pricing techniques (which reduce the retail price) and non-pricing techniques (which add value to the product).
The first group includes, amongst other things: price reductions, discount vouchers, giving away parts of a product for free, handing out free samples, or selling several products as a bundle. The second group, on the other hand, includes: sales bundled with a gift, surprise prizes found inside the packaging, loyalty schemes, promotional prize draws, etc.
i360’s experience in organising sales promotion campaigns
The experience gained by sales promotion specialists clearly shows that there is a distinct correlation between the chosen set of marketing techniques and the purchasing patterns of the promoted product. The following facts can also be counted amongst equally important correlations:
- The use of price-based and non-price-based sales promotion techniques results in an uneven purchasing pattern for the promoted product;
- During sales promotions, an increase in consumption is the demand factor that generates the highest level of purchases;
- During non-price-based sales promotions, an increase in the number of buyers is the demand factor that generates the highest level of purchases;
- The stocks accumulated by consumers do not depend on the group of sales promotion techniques used.
Sales Promotion FAQ – Frequently Asked Questions
What is a sales promotion?
Sales promotion is a marketing technique designed to significantly increase sales volume over a statistically short period. Sales promotion is short-term in nature and generates immediate results in business practice.
What are the benefits of a sales promotion?
Sales promotions are used to introduce a new product or service into a company’s range quickly and effectively; they can also help to boost sales of the existing range.
Why is sales promotion becoming increasingly important?
Sales promotion is becoming increasingly important, as it can yield significant results in terms of boosting sales of products or services within a relatively short period of time.
When is it worth using sales promotion measures?
Sales promotion is ideal wherever there is a need to launch a new product or service onto the market, and also in situations where there is a need to quickly boost sales of the company’s current range.
