Types of Sales Promotions
Sales promotions are
activities that supplement a company’s advertising, public relations, and
professional selling efforts. They create incentives for customers to buy
products more quickly and make larger purchases. Sales promotions are often
temporary, but when the economy is weak, sales promotions become even more
popular for consumers and are used more frequently by organizations.
1. Consumer Sales Promotions
2. Trade Sales Promotions
Consumer Sales Promotions
Samples, coupons,
premiums, contests, and rebates are examples of
consumer sales promotions.
Samples - Do you like free samples? Most people do. A
free sample allows consumers to try a small amount of a product so
that hopefully they will purchase it. The strategy encourages trial and builds
awareness. You have probably purchased a product that included a small free
sample with it—for example, a small amount of conditioner packaged with your
shampoo. Have you ever gone to a store that provided free samples of different
food items? Although sampling is an expensive strategy, it is usually very
effective for food products. People try the product, and the person providing
the sample tells them about the product and mentions any special prices for it.
Coupons
- In many retail
grocery stores, coupons are given to consumers with the
samples. Coupons provide an immediate price reduction off an item.
The amount of the coupon is later reimbursed to the retailer by the
manufacturer. The retailer gets a handling fee for accepting coupons. When the
economy is weak, more consumers cut out coupons and look for special bargains
such as double coupons and buy-one-get-one-free (BOGO) coupons. They may also
buy more store brands.
Mobile
marketing and the Internet provide consumers in international markets access to
coupons and other promotions. In India, the majority of coupons used are
digital, while paper coupons have the largest share in the United States. Over
80 percent of diapers are purchased with coupons; imagine how much easier and
less wasteful digital coupons scanned from a mobile phone are for both
organizations and consumers.
Other
sales promotions may be conducted online and include incentives such as free
items, free shipping, coupons, and sweepstakes. For example, many online
merchants such as Shoe Station and Amazon.com offer free
shipping and free return shipping to encourage consumers to shop online. Some
firms have found that the response they get to their online sales promotions is
better than response they get to traditional sales promotions.
Premium - Another very popular
sales promotion for consumers is a premium. A premium is
something you get either for free or for a small shipping and handling charge
with your proof of purchase (sales receipt or part of package). Remember
wanting your favorite cereal because there was a toy in the box? The toy is an
example of a premium. Sometimes you might have to mail in a certain number of
proofs of purchase to get a premium. The purpose of a premium is to motivate
you to buy a product multiple times. What many people don’t realize is that
when they pay the shipping and handling charges, they may also be paying for
the premium.
Contests - Contests or
sweepstakes also attract a lot of people. Contests are sales
promotions people enter or participate in to have a chance to win a prize. The
Publisher’s Clearing House Sweepstakes and the Monopoly Game at McDonald’s are
both examples. The organization that conducts the sweepstakes or contest hopes
you will not only enter its contest but buy some magazines (or more food) when
you do.
Loyalty programs - They are sales promotions designed to get repeat
business. Loyalty programs include things such as frequent flier programs,
hotel programs, and shopping cards for grocery stores, drugstores, and
restaurants. Sometimes point systems are used in conjunction with loyalty
programs. After you accumulate so many miles or points, an organization might
provide you with a special incentive such as a free flight, free hotel room, or
free sandwich. Many loyalty programs, especially hotels and airlines, have
partners to give consumers more ways to accumulate and use miles and points.
Rebates - They are
popular with both consumers and the manufacturers that provide them. When you
get a rebate, you are refunded part (or all) of the purchase price of a product
back after completing a form and sending it to the manufacturer with your proof
of purchase. The trick is completing the paperwork on time. Although different
types of sales promotions work best for different organizations, rebates are
very profitable for companies because many consumers forget or wait too long to
send in their rebate forms. Consequently, they do not get any money back.
Rebates sound great to consumers until they forget to send it back.
Trade Promotions
In business-to-business (B2B) marketing, sales
promotions are typically called trade promotions because they are targeted to
channel members who conduct business or “trade” with consumers.
Trade promotions include trade shows, conventions, event
marketing, trade allowances, training, and special incentives given to
retailers to market particular products and services, such as extra money,
in-store displays, and prizes
Trade
shows - A trade show is an event in which firms in a particular
industry display and demonstrate their offerings to other organizations they
hope will buy them. There are typically many different trade shows in which one
organization can participate. Using displays, brochures, and other materials,
representatives at trade shows can identify potential customers (prospects),
inform customers about new and existing products, and show them products and
materials. Representatives can also get feedback from prospects about their
company’s products and materials and perhaps about competitors.
Conventions - Conventions, or meetings, with groups of
professionals also provide a way for sellers to show potential customers
different products. For example, a medical convention might be a good opportunity
to display a new type of medical device. Sales representatives and managers
often attend conventions to market their products.
Sales contests- Which are often held by manufacturers or vendors, provide
incentives for salespeople to increase their sales. Often, the contests focus
on selling higher-profit or slow-moving products. The sales representative with
the most sales of the product wins a prize such as a free vacation, company
recognition, or cash.
Trade allowances give channel partners—for example, a
manufacturer’s wholesalers, distributors, retailers, and so forth—different
incentives to push a product. One type of trade allowance is an advertising allowance (money) to advertise a seller’s
products in local newspapers. An advertising allowance benefits both the
manufacturer and the retailer.
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