Sales promotion refers to short-term incentives, which are designed to encourage the buyers to make immediate purchase of a product or service. These include all promotional efforts other than advertising, personal selling and publicity, used by a company to boost its sales. Sales promotion activities include offering cash discounts, sales contests, free gift offers, and free sample distribution. Sales promotion is usually undertaken to supplement other promotional efforts such as advertising and personal selling. Sales promotions include only those activities that are used to provide short term incentives to boost the sales of a firm.
Advantages of Sales Promotion are given below :
• Attention Value: Sales promotion activities attract attention of the people and due to that attention, sale of that product increases.
• Useful in New Product Launch: Sales promotion tools can be very effective at the time of introduction of a new product in the market. It induces people to break away from their regular buying behaviour and try the new product.
• Synergy in Total Promotional Efforts: Sales promotion activities are designed to supplement the personal selling and advertising efforts used by a firm and add to the overall effectiveness of the promotional efforts of a firm.
Disadvantages of Sales Promotion are given below :
• Reflects Crisis: If a firm frequently rely on sales promotion, it may give the impression that it is unable to manage its sales or that there are is no one for purchase of the product.
• Spoils Product Image: Use of sales promotion tools may affect the image of a product. The buyers may start feeling that the product is not of good quality or is not appropriately priced.
Sales promotion which are commonly used nowdays are given below:
• Rebate: Offering products at special prices, to clear off excess inventory. Example, a motorcycle manufacturer’s offer to sell a particular brand of motorcycle at a discount of ₹ 15,000, for a limited period.
• Discount: Offering products at less than list price. Example, a soap company’s offer of ‘Discount Up to 10%’.
• Refunds: Refunding a part of price paid by customer on some proof of purchase, say on return of empty foils or wrapper. This is commonly used by food product companies, to boost their sales.
• Product Combinations: Offering another product as gift along with the purchase of a product, for example, offer of a noodles with the purchase of a bag of wheat flour.
• Quantity Gift: Offering extra quantity of the product commonly used by marketer of toiletry products. For example, a shaving cream’s offer of ‘40% Extra’ or A Hotel’s offer of 5“Take a 2 Night 3 Days Package At the Hotel and Get an Extra Night Stay At Just ₹ 500” or ‘Buy 2 Get 1 Free’ offer of a marketer of shirts.
• Instant Draws and Assigned Gift: For example, ‘Scratch a Card’ and instantly win a Refrigerator, Car, T-shirt, Computer, with the purchase of a TV.
• Lucky Draw: For example, the offer of a bathing soap to win a gold coin on lucky draw.
• Usable Benefit: ‘Purchase goods worth ₹ 3000 and get a holiday package worth ₹ 3000 free’ or ‘Get a Discount Voucher for Accessories on Apparel Purchase of ₹ 1000 and above.’
• Full finance @ 0%: Many marketers of consumer durables such as Electronic goods, automobiles etc offer easy financing schemes such as 36 easy instalments. However, one should be careful about the file charges, which sometimes is nothing but interest recovered in advance.
• Sampling: Offer of free sample of a product, say a detergent powder or tooth paste to potential customers at the time of launch of a new brand.
• Contests: Competitive events involving application of skills or luck, say solving a quiz or answering some questions.