Concept of Sales Promotion

Sales promotion is a tool of promotion that a company uses to promote their brand and product to increase sales or to create a demand for that product in the market. Sales promotion can be defined as a temporary or a limited period offer by the companies to promote their brand or new products.

In this article, we will focus on sales promotion concepts and types of promotion. These sales promotions play an essential role in increasing the companies’ sales.

Definition of Sales Promotion

Sales promotion can be defined as promoting a product, brand or service among consumers with a direct approach to increasing sales. 

In simple words, we can define sales promotion as a set of different tools to increase the sales of the company’s products. A television advertisement or an outdoor hoarding is an example of a sales promotion. For a better understanding of the concept of sales promotion, we need to understand its different tools.

Types of Sales Promotion

There are various types of sales promotions that a company uses to increase sales. Some of the sales promotion tools are as follows:

1. Exchange offer: In this type of sales promotion, companies ask their users to purchase their products in exchange for old products. For example, purchase a brand new TV in exchange for old TV on e-commerce sites such as Amazon, Flipkart, etc. These offers are often valid for a particular brand, but they sometimes offer exchanges for other brands.
2. Coupons: In this sales promotion, consumers receive a coupon from the brand, usually via a competition or contest, which can be redeemed at the time of purchasing products. An example of a coupon is where a brand calls consumers to buy merchandise worth Rs. 2500 and avail coupons of Rs. 1000 and redeem this coupon on their purchase worth Rs. 3000 from any grocery store. 
3. Free sample: This is another type of sales promotion that brands resort to for increased sales. Companies offer free samples of their new product along with other products to customers. For example, a sample sachet of conditioner with a shampoo or a free oil sample with the shampoo bottle. The main purpose of this type of sales promotion is to either attract new customers or to enter the new products market.
4. Sales promotion letter: The company sends a letter to the buyer’s address to promote their activity or information about new products. 
5. Gifts and premium: In this sales promotion, companies offer products at low prices or free products along with a particular product. For example, buy lipstick of a brand and get a surprise gift. Companies also give gifts like calendars, wallets, etc., to the buyers on the purchase of products, where these gifts carry the company’s logo and brand name for their promotional purpose.
6. Rebate or cash refund offers: Another sales promotion tool is offering cashback to the customers after purchasing the product. Here the company offers a cash refund to the buyers when they submit the purchase proof to the manufacturers.
7. Warranty or guarantee: An offer of a warranty or guarantee to repair the product at no cost is also a sales promotion technique. This offer is valid if the product stops working within a stipulated period.
8. Free trials: In this promotion, the company asks the target consumers to try their new product for free. Packaged drinks, flavoured yoghurts, new snacks, etc., are some of the examples of free trials.
9. POP or Point of Purchase: At the retailer store, a POP display showcases the products and attracts potential buyers to purchase their products.
10. Contests and games to win a prize: Companies offer the buyers to participate in games or contests to win prizes like cash, products or trips upon purchasing a particular product. Sometimes merchants ask the buyers to participate in games like couple games, bingo, etc., to win a prize.

Benefits of sales promotions

Some of the benefits of sales promotion are:

1. They create opportunities for the buyers to try new products at less prices, thus rooting more buyers for the brand.
2. It is a successful tool for launching new products in the market.
3. It is an exceptional tool for companies to clean out old stock from their inventory.
4. This is an excellent tool for brands to retain existing buyers by rewarding them with gifts and prizes.
5. It is a great tool to increase the last-minute revenue of the company. 

Cons of Sales Promotion

The following are some of the disadvantages of sales promotions. 

1. Sometimes these sales promotions can decrease the value of a brand, as often there is a misconception among the buyers that these promotions are rolled out when the brand’s products are not doing well.
2. After purchasing the product at discounted prices, consumers are not ready to purchase them at the original price, affecting long-term sales and brand value.

Conclusion

The concept of sales promotion can be described as a technique to promote the company or brand for a short-term period to achieve specific goals. There are different types of sales promotions offered by brands for various reasons, such as achieving sales targets quickly.