Sales promotion is the method of promotion in which incentives are given to the potential buyers so that they make an immediate purchase and become the actual buyers. This method is useful for boosting up the sales of the products. These are the non routine incentives that are offered to attract the customers and also the dealers. There are several sales promotion techniques that are commonly used for a long time now. These include free samples, contests, discounts, additional products, bonuses, dealer discounts, dealer competitions, special offers etc.
Merits of sales promotion
There are various benefits of sales promotion for customers, organizations and middlemen. They are as under:
People are likely to get attracted towards the customers because of the incentives offered. We have seen large number of people outside the store where sale gets started; this is because of the attraction of people towards the offer.
Useful in new product launch
People are usually afraid to try out new things and new products and to remove this constraint it becomes important to give them some incentive to try out something new. During launch of new products or introduction of new services, sales promotion activities give huge benefit.
Synergy in total promotional efforts
It is not necessary to only go for one promotional tool. Many organizations use a mix of various promotional techniques and sales promotion will help in boosting the effectiveness of other techniques.
Limitations of sales promotion
The limitations of sales promotion technique are as under:
- Spoils product image: sales promotion technique means giving incentives to people so that they get attracted towards the product. This can spoil the image of the company as the customers may get the thought that products are either not of good quality or are not rightly priced and that is the reason that company is offering it for sale or giving additional products.
- Reflects crisis: frequent use of sales promotion technique is not good for company as it gives an impression that the company is not in a position to manage the sale of the product or the product is not of good quality.
Some commonly used techniques or activities under sales promotion are:
- Rebate or coupons: coupon means a voucher or a code which will allow the customer to receive the discount at the time of purchase. While, rebate is also the same but it is given after the purchase in the form of return or cash back etc. Coupons can be provided to the customers through newspapers, e-mails etc.
- Discounts: this is the most common method in which the products are offered at lower prices than the marked price. For example: washing machine may be listed at Rs 50,000 but after the discount of 10% it may be sold at Rs. 45,000.
- Refunds: refund means that a part of price money is returned to the customers after they have paid for the product. For example: when the customer has already purchased washing machine and then the refund offer is given of returning 20% of the amount paid, then the money will be returned either in the form of cash or in the form of some credit points.
- Product combinations: this is a unique method to boost the sales. A gift product is offered along with the main product. For example: toothbrush is offered along with the toothpaste or pen is offered along the notebook etc.
- Quantity gift: extra quantity of product or service is offered to the customers so that they can make more use of the product or service. For example: extra day stay at the hotel for free, 10% extra jam in the bottle of jam etc.
- Instant draws and assigned gifts: this means that instantly a product or service is offered to the customers through a small activity such as scratch a card etc.
- Lucky draws: lucky draw can be called a competition in which a person whose name gets selected will get the product or service for free or a small service charge. This creates excitement in the customers. For example: purchase of certain product and win a mobile phone or a car etc.
- Useable benefit: this is the method of increasing sales and also providing some useful benefit such as on purchase of jewellery of Rs. 2,00,000 the customer will get holiday package for free.
- Full finance at 0% interest: there are certain financing companies who provide the finance at zero interest. This gives easy instalment option to the customers and reduces the high charge burden of customers in case of products which are of expensive such as washing machine, televisions, etc.
- Contests: contests are based the quiz, luck etc. in this case the customer can take part in the competition and answer the question or do certain activity required by the competition rules and thus get the benefits. For example: complete the Sudoku in newspaper and send it to the newspaper office and they provide certain products as winning price.
- Samples: free samples can be provided which is useful at the time of introducing the new product to make people aware about the product and help them understand the use of the product. For example: providing sample product of soap, toothpaste, turmeric powder, detergent powder etc.