Sales promotions are short-term incentives to buy products. Marketing managers use sales promotions to stimulate buying and increase consumer interest in a product. Promotions differ from advertising in that advertising offers reasons to buy, while promotions offer incentives to buy. Examples of promotions include discount sales, free samples, coupons, refunds, prizes, displays, demonstrations, contests and premiums.
Every promotional campaign has a unique marketing role, but promotions are often used to turn short-term interest into long-term product loyalty. Sales promotions attract new customers, reward dedicated customers and persuade occasional customers to buy. Marketing managers of a product with diminishing interest will run a sales promotion to keep the product in circulation. Meanwhile, promotions for higher-end, more expensive products use sales promotions to convert consumers who typically make economical purchases.
Samples are a free amount of a product, usually less than what’s available for purchase. Samples might come in the mail or attached to other products. Coupons entitle the holder to product savings. Traditionally, coupons came as direct mail or in newspapers, but coupons printed from online sources are increasing in popularity. Premiums are gifts that come with purchases. Common premiums are buy-one-get-one sales and gifts that come from mailing UPC codes and receipts to manufacturers. Prizes can be won from company-sponsored contests, games and sweepstakes. Refunds or rebates provide cash back at some point after the purchase. Finally, point of purchase displays and demonstrations market to potential customers by presenting advertising where the product is sold.
Marketing managers have several options when creating a promotional campaign, and various types of sales promotions can be combined to maximize the effect of the promotions. For example, a coupon and a contest might encourage different types of consumers to buy the same product. Decisions must be made about the geographical scope and duration of the promotion. Contests and rebates need set conditions. Many states have laws governing promotions, especially contests. Marketing managers must also create and conform to a total sales promotion budget.
Campaigns should be advertised using a variety of mediums including newspapers, television and radio spots. Most modern promotional campaigns incorporate elements of information technology such as website announcements or email reminders discussing the promotion. Because promotional campaigns are run for a limited time, marketing managers must work to spread word of the promotion and persuade many customers to use the promotion why buying the company's product.