It's a marketing strategy that brands rely on to create demand for their products in the short term. Thanks to a sales promotion, consumers can buy goods or services at cheaper prices, receive free samples or gifts and get access to many other perks. Here is the list of the main goals the businesses can achieve due to promotions.
Remind their loyal customers that they value them
Attract new customers
Create markets for new products
Take products to new markets
Increase brand awareness
Gain dealers' trust
Sell out extra inventory
Gain valuable insights
While most of these goals are rather obvious, some entrepreneurs might fail to fully realize the potential of insights. When analyzing the success of their promotions, merchants can better understand what their clients want, what influences their purchasing decisions and which offers the value the most.
They are efficient only in the short term. Merchants can't rely on them permanently. If customers get used to discounts, you would hardly be able to make them pay the full price for the same product. Such a situation is known as a "sales promotion trap". It might devalue your brand and undermine your business.
To avoid this trap, you shouldn't organize promotions too frequently. They should remain a special affair that takes place only a few times per year.
Below, you'll find brief descriptions of the most popular and efficient types of sales promotion. Depending on their goal, they fall into these three categories.
Encourage repeat business
Boost brand awareness
Some strategies will be accompanied with real-life examples for better understanding.
This type of sales promotion suggests that the merchant gives a free sample to everyone who enters the shop, regardless of whether they buy something or not. It helps vendors to achieve the following goals.
Increases brand awareness
Introduces consumers to products they may not have considered before
Triggers the psychology of ownership where the person chooses the promoted product if they like the sample
Involves no risks or commitments for people who try the product
This sales promotion is ideal for food and beauty products. But it might deliver superb results in other spheres as well.
When talking about such deals, professionals use the BOGO abbreviation (Buy One, Get One). If the client doesn't get the second item for free but pays a minimum price for it, the sales promotion also falls into this category. It creates a sense of urgency and helps merchants to clear their stocks. Many people would give that second extra item as a gift to their friends or relatives, which would be an excellent way for increasing brand awareness.
Merchants can use this approach to promote not only products that one can touch with their hands but also time-based services. For instance, if a client books an hour of private yoga classes in the low season, they get the second hour as a gift.
The most amazing thing about this sales promotion is that it involves no extra expenses for business.
An example: the merchant pays $5 for a product that they sell for $15. If the merchant offers a 50% discount for this product, they will still make $5 on each item. The more items they sell, the higher their income.
This type of sales promotion encourages consumers to make the purchase and increases their loyalty to the brand. Customers might prefer a discount and not cashback because with the former, they get immediate benefit. But for merchants, the latter might be more helpful.
The target audience of this sales promotion is a group with specific demographics and lifestyle — such as new mothers, seniors or sportsmen. Campaigns of this sort might run all the year round. Alternatively, merchants might time them to professional holidays or other festive occasions.
Merchants can organize recurring sales once or twice per year. Such a schedule will build anticipation. Consumers will have enough time to prepare and will be excited to spend.
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This sales promotion implies that a discount or rebate is only valid for a short period of time (from a few hours to a few days). Customers realize that they might miss a profitable opportunity unless they make the purchase urgently. To maximize the efficiency of this strategy, marketers should inform their target audience in advance about the flash sale.
If a customer buys in bulk, they get a discount. This sales promotion enables merchants to reduce unsold inventory.
Black Friday is the most famous sale on a global scale. Merchants love it because they don't need to put much funds and effort into promoting it. Consumers get ready for this event in advance — and merchants just need to remind them to take part in it.
Cyber Monday and Valentine's Day are also good for offering discounts. Aligning your promotions with common shopping holidays is always a wise idea.
Customers can exchange their old TVs, fridges, sofas or whatever for new ones. Both sides would benefit from such a deal. The client won't need to pay for recycling — and they get a nice discount for a new item. The merchant gets income, increases customers' loyalty and might earn a bit on recycling old items in bulk.
This can be, for instance, a low-interest EMI or no-cost EMI. This sales promotion enables consumers to purchase expensive products.
Not all entrepreneurs know about this sales promotion — but it's very efficient. In your Google My Business account dashboard, you can create the following varieties of social posts: Offers, Updates, Events and Products. If you opt for the Offer, you'll be able to announce a deal right on your Business Profile. This will enable you to reach out to clients who find your business on Google Maps and Search. This strategy will help you to drive more traffic to your website and boost your conversions.
The target audience of this sales promotion are people who have never bought your products yet but might be somehow connected to your business. Maybe, they had a free trial or liked your posts on social media. To inspire them for a purchase, you can offer them a voucher that is valid only for a limited period of time.
Apart from the first purchase, you might want to distribute coupons among your loyal customers. You can send coupons to your clients' emails or their user profiles on your site. Consumers will feel grateful because you think of them and take care of them. Digital coupons are not the only possible format. Print materials still attract a lot of attention — so it might be wise to print a coupon on a receipt or product packaging. To spice up this sales promotion, you might want to create secret coupons. When the client gets it, they don't know which perks exactly it can bring them. They're excited about this "lottery" and they enjoy the element of gamification.
This sales promotion is also known as "upselling". The customer might not be ready to afford the most complex and the costliest version of the product — but they might want to start with the basic one. The sales rep should aim to get this client into the brand's ecosystem and sales CRM to be able to nurture them through the buyer's journey. Once a person builds trust with a brand, they might gradually want to upgrade to a higher-priced offer.
This sales promotion can humanize your brand and make it more appealing to customers who value ethical aspects highly. One of the greatest advantages of fairtrade is that it works equally well for businesses of nearly all sizes and spheres.
People might want to support local businesses because of patriotism or because they're environmentally conscious. This sales promotion works best for food, beauty products, clothes, furniture and decor items.
Over ⅔ of customers would be more likely to spend more at a small business if they knew it supported an environmental or social cause. When organizing such a sales promotion, the merchant should make it as transparent as possible. Consumers should be able to track the circulation of funds to ensure they reach the final recipient.
This sales promotion is known as the best cure for abandoned shopping carts. The cost of shipping might be the last obstacle that prevents people from completing their orders.
If a brand produces high-quality products, people won't be likely to return them too often. The aim of this sales promotion is to reduce friction in the purchase process.
Loyalty program as it is is an efficient tool of improving customer retention. Yet sometimes, a merchant might want to spice it up and offer its clients even more lucrative perks than usual. For instance, you might want to introduce punch cards. After a customer makes a certain number of purchases in a store, they receive a special offer. Every time they use this card, they might get a small discount. The trickiest part of this strategy is that the merchant needs to remain profitable after distributing the gifts.
Alternatively, you might double or triple loyalty points for a limited time to encourage customers to buy more. Besides, when you give a loyalty card to a new client, there should be a certain sum of points on it. This type of sales promotion is one of the most efficient methods of convincing people to come back to your store.
You should resort to this sales promotion if you want to extend the reach of your brand. This is how this strategy works.
It's not synonymous with promoting your competitors by any means! You should offer to your customers such products that complement each other. Sometimes, professionals call this strategy "bundled gifts". The term "bundled" means that two brands cooperate to launch a sales promotion. Apart from raising brand awareness, bundles are indispensable for reducing unsold inventory.
An example: you bake cakes and you form a partnership with a company that sells flowers. If someone orders a cake that costs a certain minimum price or higher, they get a bunch of flowers as a free gift. And if they buy a bunch of flowers with a certain price tag, they get a cake as a gift.
A merchant should announce such a sales promotion on social media. It should invite its followers to carry out some simple actions to become eligible for the giveaway. Ideally, they should tag their friends in comments to the merchant's post because that would enable the business to gain more quality followers. Then, the merchant chooses the winners using a random number generator.
This type of sales promotion resembles giveaways in its essence. But to get the prize, consumers need to complete simple tasks.
An example: a shop that sells children's toys asks its customers to take photos with funny animal figures from their new collection. They should post these pictures on Instagram and add hashtags with the name of the shop to them. The authors of five best shots will get a 25% discount coupon for their next purchase.
It's a type of contest that features a remarkably generous prize: the winner can go on a shopping spree in your store! Of course, they shouldn't be able to get hold of everything they fancy. You should thoroughly calculate what you can offer.
The primary merit of shopping sprees is that they trigger powerful word-of-mouth marketing. After the winner gets the prize, they will be likely to tell their friends, colleagues and family members about it. They might create emotional posts in social media and you can share them with your business account.
Thanks to this type of sales promotion, customers can get some perks if they invite new clients to a business using their individual referral links. They can share this link in their social networks or send it in private messages.
An example: a person who refers three friends to an online shop and gets a 25% discount for his or her next purchase if all of these friends make a purchase of at least $10 each.
All the strategies that were described above were targeted to consumers. But a business might need to arrange a sales promotion for another business. In this case, it might be reasonable to consider the following ideas.
Events like these provide an opportunity both for manufacturers and vendors to describe their products to the audience. These gatherings act as platforms for businesses to underscore the features and advantages of what they offer. Also it establishes a connection with potential customers. At the same time, attendees are presented with a chance to discover a wide range of goods and services. Take a look at significantly discounted prices through special event offers. This dynamic interaction between sellers and buyers creates an atmosphere of excitement and exploration. Take into account that it makes these events mutually beneficial, for all parties involved.
Retailers should receive such displays at no cost. The main mission of this solution is to drive sales. POP displays themselves are displays that exist separate from the standard aisle shelf, effectively inserting a product into a shopper’s path through the store.
Example: In a grocery store you may come across a sticker specifically placed on a shelf to catch your eye as you wander down the aisle. Another technique is when you encounter a display, with products and the brand of the vendor. So to effectively utilize this advertising method it is essential to have an eye-catching design that visually sets the product from others. These displays often appear in the middle of large store aisles called “action alleys,” or anywhere else in the store where there is open space.
Some merchants might want to promote a specific product and increase its sales for a limited time period. For this, they might get lucrative concessions.
The most common trade agreements are of the preferential and free trade types, which are concluded in order to reduce (or eliminate) tariffs, quotas and other trade restrictions on items traded between the signatories. Trade promotion describes strategies such as providing volume discounts, offering merchandise and creating exclusive deals. One and maybe the most important and effective method for manufacturers and distributors to introduce products to retailers and trade partners… is through sampling programs. These programs serve as an opportunity to showcase the product's features and benefits.
Nowadays many firms experience periods of deteriorating financial performance as a result of global competition, technological turbulence and maladaptive decisions of the management team. And no matter what the state of the economy, no company is immune from internal hard times — stagnation or declining performance. So using different promotions will be a great opportunity for increased sales.
Merchants have the opportunity to take advantage of prices. Especially in moments when they make orders for products. Such a promotion encourages buying in bulk, and it is beneficial for both the merchant and the supplier. Offering discounts based on volume can be useful practice. So it should be described as an accepted business practice that helps build connections between wholesalers and retailers. By providing rates for quantities suppliers can efficiently manage their inventory while merchants can save costs leading to increased profit margins. This setup motivates inventory management and collaboration ultimately driving success in the market.
Business Owners are often enticed by an offer when they place orders for batches of products. They receive a bonus in the form of a gift, which not only encourages them to place larger orders. But it also helps establish a strong sense of appreciation and rapport between the seller and buyer. So what is it exactly? Dealer Loader…a gift given to a retailer who purchases a specified quantity of a product during a trade sales promotion. These considerate gestures play a role in strengthening the business relationship fostering loyalty and encouraging repeat business.
If a retailer meets a certain sales goal, they get a cash bonus. The more units a vendor sells in a certain time period, the more generous the reward.
An example: if a retailer sells 100 units within a month, they get a $50 bonus and if they sell 150 units within a month they get a $80 bonus.
Before launching a sales promotion, merchants should research their customers' interests. Plus, they should get to know what their competitors offer. One should never copy someone else's campaigns — instead, one might use them as a precious source of inspiration. You should offer your clients only useful goods or services. It would be unreasonable to give them something that they might want to get rid of immediately because they don't need it.
Create a sense of urgency and scarcity. Don't let people postpone their purchasing decisions. They should realize: if they don't buy the product now, they might never get a second chance. But of course, you shouldn't be overly persistent and push people too straightforwardly. Never economize on advertising. Promotions won't deliver the desired result if people don't know about them. Try to use different communication channels to spread the word about your plans among your audience.
Once a promotion is over, you should analyze its efficiency. Don't launch a new promotion until you draw conclusions from the previous one. You shouldn't test the strategies from this article randomly, just to carry out exciting experiments. Such an approach might be too costly — and it might create that very trap that was mentioned in the first half of the text. Instead, try to improve your promotions gradually, fine-tuning their most important aspects.
An example: during the precious recurring sale, you offered a 25% discount for half of your assortment. What if during the next sale, you offer a 20% discount for 75% of the assortment? Could this measure boost your sales? This would be a sensible adjustment of your promotion.
Sales promotion is a dynamic marketing technique that businesses use to generate consumer interest and stimulate demand for their products. This complete and easy-to-understand approach includes incentives like discounts, coupons, contests, samples and other enticing offers. By implementing these strategies businesses entice individuals to make purchases increasing engagement and creating a desire for their products or services. Essentially sales promotion acts as a catalyst that sparks consumer curiosity and motivates them to make enthusiastic buying decisions.
To avoid falling into the "sales promotion trap " businesses should exercise caution. Use promotions wisely. Overusing discounts can diminish the value of a brand and discourage customers from paying prices. It is important to treat promotions as occasions that occur a few times each year. This approach helps maintain the appeal of promotions, preserves the brands perceived value and prevents customers from getting used to constant discounts. By spacing out these events businesses can find a balance between increasing sales and upholding their brands reputation.
To create sales promotions businesses need to take an approach. They should explore customer preferences, analyze competition, create a sense of urgency and exclusivity, use channels and carefully evaluate the results afterwards. By paying attention to these factors businesses can optimize their efforts. Additionally success comes from making improvements and adjustments, over time. By assessing and refining their strategies businesses can achieve results that lead to long term benefits. This process also helps them understand how to engage customers and generate buying impulses effectively.
Sales promotions play a role in marketing as they help boost sales and cultivate customer loyalty. They serve purposes, including attracting customers, retaining existing ones, introducing new products and rewarding loyal customers. Sales promotions are effective in increasing product/service visibility creating a sense of urgency or enthusiasm and minimizing purchase risk. Moreover they contribute to building brand awareness and enhancing the customer experience.