Sales promotion consists of promotional activities that stimulate purchases, other than advertising, personal selling, and publicity. It normally involves a direct inducement (such as money, prizes, free trials, extra products, gifts, or specialized information) that provides extra incentives to buy now or buy more, visit a store, request literature, display a product, or take some other action. Promotions are also designed to motivate impulse purchase (through the implementation of in-store displays), increase the quantity purchase (via pricing discounts), or shift the burden of inventory from the manufacturer to distributors or retailers (by providing volume discounts or other incentives).
Sales promotion activities occur simultaneously with, and leverage advertising and publicity.
Examples of Sales Promotion:
- Fashion shows
- Free samples
- Novelty items
- Trade shows
The Positive Effect of Sales Promotion on Brand Volume
Sales promotion adds immediate and tangible value to the brand by maximizing sales volume. Advertising helps to develop and reinforce quality, differentiate brand reputation, and build long-term market value. A short-term price cut or rebate may be very effective at boosting sales.
When all brands appear equal, sales promotion can be more effective than advertising in motivating customers to try a new brand or to select one brand over another. A strong sales promotions should be focused, creative, hard to imitate, and should well timed.
The Negative Effect of Sales Promotion on Brand Volume
Excessive sales promotion at the expense of advertising hurts profits. Some marketers believe the proper expenditure balance is approximately 60% for trade and consumer promotion and 40% for advertising. High levels of trade promotions relative to advertising and consumer promotions, have a positive effect on short-term market share, but may have a negative effective on brand attitudes and long-term market share.
Many consumer promotions can undercut a brand's image, especially those that offer discounted pricing. Customers may not develop brand loyalty and promotions may erode brand perception.
Sales promotion has a high cost relative to gains generated. Overly aggressive sales promotion can draw competitors into a price war, which reduces sales and profits for everyone.