Like all businesses, manufacturers must sell their products to make a profit. Some manufacturers sell their products to intermediaries, which in turn sell the products to the end consumer. Other manufacturers sell their products directly to consumers. Still others adopt a hybrid approach. No matter which approach a manufacturer chooses, effective sales promotion can help increase the chances of financial success.
Sales promotion is a category of the promotional mix, alongside advertising, personal selling and public relations. The primary importance of a sales promotion is to offer an inducement to buyers, increasing sales. In some cases, the other components of the promotional mix support a sales promotion strategy. For example, an advertising campaign might be used to publicize a sales promotion strategy.
Manufacturers that sell directly to consumers can use sales promotion strategies to increase sales. Consumer incentives, such as attractive financing terms, might convince consumers to make a large purchase. Coupons, bulk discounts and frequent-buyer reward programs also give consumers more motivation to buy a product. For example, a manufacturer might offer steep price discounts at its on-site shop, convincing consumers to travel to its location to obtain deals they can’t get at their local retailers.
Manufacturers also can use typical consumer sales promotion techniques to promote sales to intermediaries. Suppose a clothing manufacturer sells its products to wholesalers, which in turn sell the clothing to retail shops. The clothing manufacturer can use consumer sales promotion strategies -- such as attractive financing or bulk-purchase discounts -- to motivate intermediaries to take on more inventory for resale. A lower purchase price, for example, allows a reseller to make a larger profit on each sale to end consumers.
Manufacturers also can use sales promotion strategies specifically designed to motivate trade sales, such as in-person demonstrations at industry conventions and trade shows. As with consumer sales promotions, trades sales promotions increase the attractiveness of the manufacturer’s products.
In every case, sales promotion can help a manufacturing organization improve its financial performance; selling larger amounts of inventory increases revenues. Sales promotions might persuade skeptical buyers to make a purchase, possibly developing customer loyalty and leading to long-term relationships. Sales promotions also help manufacturers rid themselves of surplus inventory if a manufacturer produces more items than necessary, perhaps due to an inaccurate sales forecast, for instance.