What is Sales Promotion?

So far I’ve covered the importance of your company website, public relations and an overview of the marketing wheel.  In today’s post, I want to educate you on what sales promotion is.  Time and time again, I hear people say “advertising” when they really mean “sales promotion”.  The two terms are often confused with each other but they are not the same thing.

Sales promotion is used as a short term technique to persuade customers to make a quick purchase.  These are things like:

·         coupons

·         buy one get one free deals

·         giveaways

·         free events such as workshops

·         loyalty programs

·         buy now – pay later plans

·         free samples

This is just a short list of the things that you can do to incorporate sales promotion into your marketing plan, but it gives you an idea of what sales promotion is to begin with.

Advantages of sales promotion:

Price competition – One of the advantages of sales promotion for small business owners is that you can significantly lower the price of a product (at least temporarily) that is in direct competition with a larger retailer.  This in turn can drive traffic into your store, hopefully turning these new customers into permanent customers.

Encourages repeat purchases – Things like loyalty programs can encourage repeat purchases.  We’ve all been to a coffee shop or sandwich place that gives you a card where they punch it every time you purchase something.  Then after you’ve purchased 10 coffees you get one free.  That free one at the end kept you coming back, didn’t it?!

Entices new customers – As a small business owner, it’s often more difficult to make customers aware of your product or company since you don’t have a massive advertising budget.  But people always want something that is going to provide a benefit to them, so if they are going to get something for free, they are more likely to come to your store, instead of going down the street to your competitor.

Disadvantages of sales promotion:

Short-lived – The biggest disadvantage of sales promotion is that it doesn’t develop brand loyalty.  It is intended to generate immediate, short-term results.

Price Sensitivity – If sales promotions are done too frequently, customers will come to expect great deals all the time.  In this case, they will just wait until you have another promotion before purchasing the product.  Promotions are great tools, but do them infrequently.  Otherwise, you’re losing out on sales of regular priced items and losing profit.

Quality image may be compromised – When you heavily discount a product, customers may think that the product isn’t selling, so there must be something wrong with it.  For that reason, sales promotions need to be used sparingly, especially in businesses where quality and image are important to their marketing strategy.

So, definitely incorporate sales promotional activities into your marketing plan.  Plan them out to coincide with your other campaigns, but don’t do too many of them.  Remember that sales promotion is not advertising… it’s a tool that is used to generate quick, short term activity.

For help planning your sales promotion activities, contact us at info@s-b-m-s.ca.