Overtime, the business environment has become very competitive due to growth in technology, infrastructure and easy access to information around the globe. This has caused consumers preferences to keep changing due to the low switching cost in the market. With the demands of consumers increasing in the market, business organisations have increased their resources while paying close attention on attracting and retaining its consumers.
With the increasing competition in the global market, organisations are becoming more determined to ensure consumers full satisfaction. Therefore, these organisations use sale promotion as an initiative to promote and increase sales, usage or product and services trial.
The aim of every production is sales; therefore, sales and promotion are two different words and Sales Promotion is the combination of these two words. Sales promotion increases the sales.
According to American Marketing Association, “sales promotion includes those marketing activities, other than personal selling, advertising, and publicity, that stimulate consumer purchasing and dealer effectiveness, such as displays, shows and expositions, demonstration, and various non-recurrent selling efforts not in the ordinary routine.”
Sales promotion refers to the provision of incentives to consumers or to the distribution channel in order to stimulate demand for a product or service. The success of any business organisation depends largely on consumer patronage. Sales promotion methods is aimed at capturing the market and increasing the sales volume. Now-a-days sales promotion is a necessary tool to boost sales. Sales promotion is not an expenditure; it is rather an investment, as it pays rich returns. It aims in creating demand for a particular product or service.
In other words, sales promotion moves the product. A business organisation must make the customers know the product and as well influence them to buy that product. Sales Promotion is a key element in putting across the benefits of your product or service to the customers.
Sales promotion can be an effective tool in a highly competitive market, when the objective is to convince retailers to carry a new product or influence consumers to select it over those of competitors. Consumers buying behavior has a direct effect on the success of the firm and they must ensure that they create a marketing mix that satisfies consumers.
Sales promotion is one of the four aspects of promotional mix which is an element of the four-marketing mix: product, price, promotion and distribution.
Sales promotion is an important function of marketing. It serves as a connecting link between personal selling and advertising. Sales promotion is an important ingredient in marketing campaigns. It is normally considered as a tool consisting of short-term incentives to encourage the purchase or sale of a product or service.
Some of the commonly used tools of sales promotion are: Coupons, Free samples, Price-off Offer, Fairs and Exhibitions, Free Gifts, Contests etc., but it does not include advertisement, publicity and personal selling.
The objectives of Sales promotion and advertising are interrelated. Interrelated in the sense that they are integral parts of the ‘promotion mix’ of the business.
Advertising supports activities in relation to sales promotion by keeping the public informed about the company while on the other hand, sales promotion activities remind the people of the advertised message by the company. Advertising reaches the customers at their homes, or at the place of business or in their travels while on the other hand sales promotional devices inform, remind or stimulate the buyers at the point of purchase.
Sales Promotion serves as the voice of your company which send out your brand’s message and objectives loud and clear to the audience. Sales promotion helps your brand in so many ways of which includes: increasing brand awareness, providing appropriate information, increasing customer traffic, building sales and profits, etc. It also helps greatly in introducing products easily in the ever-so-competitive market.
The purpose of Sales promotion includes the following:
1. It disseminates information to its potential customers, which happens to be the basic purpose of promotion.
2. It is used to encourage the customers to try a new product.
3. Incentive-type promotions are used to attract new customers, to reward loyal customers and to increase the repurchase rates of occasional users.
4. It yields a faster response in sales than advertising.
5. Sales promotion has the power to turn brand switchers who are seeking for low prices, good value and premiums into loyal brand users.
6. Sales promotion is considered as a special selling effort increase sale.
7. It reduces the perception of risk associated with the purchase of a product.
8. Sales promotion helps in product differentiation, that is, differentiating a particular product of the firm from the competing products of other firms.
9. It adds to the overall effectiveness of the firm’s promotional activities.
10. It helps in defeating competitors’ promotional activities.
11. Sales promotion helps in stabilising sales volume by reassuring the customers about the quality and price of the product.
As much as sales promotion is important, there are also limitations of sales promotion which includes:
(i) No Real Incentives offered through sales promotion. Sometimes, the incentives offered through sales promotion schemes are fictional, and not real. It is said that the company will realise the cost of these incentives by raising the price of goods.
(ii) Sometimes, only products which are lacking in quality, or are not likely to be favoured by consumers, require sales promotion efforts.
(iii) Sales promotion are sometimes based on Short Term Perspectives, which means the sales promotion schemes are carried out during particular seasons and not on a permanent basis; the results achieved through them are short-lived. Therefore, as soon as the incentives offered under such schemes are withdrawn, the benefit in terms of increased sales could also vanish.
(iv) Sales promotion doesn’t create new demand, rather it shifts demand from one brand to another.
(v) The frequent use of sales promotion activities may lead consumers to think that the product is of inferior quality, which might therefore, make the consumers loose interest in buying such products.