Powered by Leeds Metropolitan University

Promotion - sales promotion

Author: Jim Riley  Last updated: Sunday 23 September, 2012

Marketing - Sales promotion

Sales promotion is the process of persuading a potential customer to buy the product.  Sales promotion is designed to be used as a short-term tactic to boost sales – it is not really designed to build long-term customer loyalty.

Some sales promotions are aimed at consumers.  Others are targeted at intermediaries (such as agents and wholesalers) or at the firm’s sales force.

When undertaking a sales promotion, there are several factors that a business must take into account:

  • What does the promotion cost – will the resulting sales boost justify the investment?
  • Is the sales promotion consistent with the brand image?  A promotion that heavily discounts a product with a premium price might do some long-term damage to a brand
  • Will the sales promotion attract customers who will continue to buy the product once the promotion ends, or will it simply attract those customers who are always on the look-out for a bargain?

There are many methods of sales promotion, including:

  • Money off coupons – customers receive coupons, or cut coupons out of newspapers or a products packaging that enables them to buy the product next time at a reduced price
  • Competitions – buying the product will allow the customer to take part in a chance to win a prize
  • Discount vouchers – a voucher (like a money off coupon)
  • Free gifts – a free product when buy another product
  • Point of sale materials – e.g. posters, display stands – ways of presenting the product in its best way or show the customer that the product is there.
  • Loyalty cards – e.g. Nectar and Air Miles; where customers earn points for buying certain goods or shopping at certain retailers – that can later be exchanged for money, goods or other offers

Loyalty cards have recently become an important form of sales promotion.  They encourage the customer to return to the retailer by giving them discounts based on the spending from a previous visit. Loyalty cards can offset the discounts they offer by making more sales and persuading the customer to come back.  They also provide information about the shopping habits of customers – where do they shop, when and what do they buy?  This is very valuable marketing research and can be used in the planning process for new and existing products.

The main advantages and disadvantages of sales promotion are:

Advantages

Disadvantages

Effective at achieving a quick boost to sales

Encourages customers to trial a product or switch brands

Sales effect may only be short-term

Customers may come to expect or anticipate further promotions

May damage brand image



Other Business Study Resources You Might Like on tutor2u


Revision quizzes for business students

Starting a Business

Sources of Finance for a Startup
Franchising
Cash Flow Forecasting for a Startup
Creating & Protecting Business Ideas
Startups and Understanding the Market
Market Research for a Startup
Locating the Startup Business
Choosing a Legal Structure for a Startup
Employing People in a Startup
Generating and Protecting a Business Idea
Using Breakeven in Decision-Making

Finance

Revenues
Breakeven Basics
Costs, Revenues and Profits
Business Costs
Using Budgets
Using Breakeven in Decision-Making
Investment Appraisal Basics
Financial Strategies
Measuring and Improving Profit
Improving Cash Flow
Working Capital
Balance Sheet
Income Statement
Financial Efficiency Ratios
Profitability Ratios and ROCE
Liquidity Ratios
Gearing

Marketing

Competition
Products & Brands
Place (Distribution)
Promotion
Pricing
Price Elasticity of Demand

Business Organisation

Basics of Business Growth
Business Activities
Legal Structure Basics
Franchising
Sole Traders and Partnerships
Limited Companies
Generating and Protecting a Business Idea
Organisational Structures

People

Working in Teams
Communication Basics
Communication Methods
Workforce Planning
Recruitment, Selection & Training
Employee Motivation
Organisational Structures

Operations

Operational Objectives
Critical Path Analysis
Scale and Resource Mix
Lean Production
Capacity Management
Customer Service Basics
Managing Quality
Operational Decision-making
Using Technology in Operations
Working with Suppliers

Economic Environment

Economic Sectors
Government Spending & Taxation
Inflation
Unemployment
Interest Rates & Monetary Policy

Business Strategy

Leadership styles
Business Culture
Change Management







Add your comments and share this study note:

blog comments powered by Disqus

 

Tutor2u support for students
Teaching support and resources
Search for resources on tutor2u

Law



Refine Search by Subject
A Level Economics
Business Studies
Geography Give It A Go!
History Law
IB Diploma Politics
Religious Studies Sociology

Order Search Results By


Follow tutor2u on Twitter
   
   

tutor2u Home Page | Online Store | About tutor2u | Copyright Info | Your Privacy | Terms of Use

tutor2u

Working with Our Partners

 Zondle - Games for LearningVue Cinemas | Moneypenny | Nexcess | Really Simple Systems 

Boston House | 214 High Street | Boston Spa | West Yorkshire | LS23 6AD | Tel +44 0844 800 0085 | Fax +44 01937 529236

Company Registration Number: 04489574 | VAT Reg No 816865400

tutor2u is proud to sponsor TABS Cricket Club and the Wetherby Cricket League as part of its commitment to invest in local junior sport