Promotion

‘Sales promotion’
Introduction:
 Sales promotion are incentives such as special offers or special deals
directed at consumers or retailers to achieve short term sales and repeat
purchases by consumers
 This form of promotion is known as below the line promotion
o Promotion that is not a directly paid for means of communication,
but based on short term incentives to purchase
 Unlike advertising sales promotion aim to achieve short term increases in
sale.

Types of sales promotion:

 Price promotions
o These are temporary reduction in price e.g. discounts
o These are aimed at encouraging existing customers to buy more
and attract new customers as the product now appears more
competitive
o However,
 Reduced gross profit on each item sold
 Negative impact on brand’s reputation
 Money off coupons:
o These are more versatile and better-focused way of offering a price
discounts. E.g. found in newspaper adverts
o However
 Might lead to huge demand which retailers might not be
ready for thus consumer disappointment
 Might not be used if the price reduction is too low.
 Customer loyalty schemes:
o These are focused on encouraging repeat purchase and
discouraging consumers to shop with competitors
o Also, the information that firm can collect through these schemes
acts as research information. E.g. consumer loyalty cards or air
miles
o However
 Reduces gross profit
 Administration costs increases
 Most consumers now have loyalty cards this their loyalty
impact is reduced
 Money refunds:
o However,
 Consumer filling in and posting off a form might be a
disincentive
 Delay before refund is disincentive
 BOGOF (buy one get and one free)
o Encourages multiple purchase
o Reduces demand for competitors’ product
o However,
  Reduction in gross profit margin
 Doubt normal price to be too high
 Impact on reputation
 Current sales will increase in expense of future sales
 Point of sale displays
o To create an on consumer behavior on the spot of purchase
o However,
 Best display positions are offered to market leaders
 New production might struggle for best position
Conclusion:
 Sales promotion is very much an active process or approach to marketing
 It is not just about informing rather also stimulating consumers demand
 Can be directed at final consumers (pull strategy) or distribution channel
(push strategy)