Sales promotion is a short-term marketing strategy designed to achieve a specific purpose. Sales promotion differs from advertising in that its intent is to create a sense of urgency to encourage immediate action as opposed to building sales or a brand over a long period of time. Sales promotion may take the form of a temporary price reduction or a campaign to introduce an item.
Use of sales promotion techniques helps to differentiate your products from those of your competitors. This is especially beneficial is your products offer essentially the same features and benefits as others on the market. A method often used to make products stand out is to offer them at a slightly reduced price for a short period of time.
Sales promotions are used to attract customers during periods of slow sales. For example, if you offer a seasonal product such as barbecue grills, by running a promotion in the middle of winter where the price is reduced by 50 percent may encourage people to buy a grill at a time where it might not otherwise cross their mind.
Increasing Market Share
Sales promotions can lead to an increase in market share for the manufacturer. The promotion will likely increase your sales by taking away sales from your competitors. As a result, your market share will increase while your competitors' share decreases.
New Product Introduction
Retailers can use sales promotions to introduce a new product. By offering the new item at a reduced price and placing a "new item" sign in front of it, they can persuade customers to give the new product a try. At the same time they can discontinue a slow-moving item in the same category by marking it down and placing a "reduced for quick sale" sign in front of it. This technique has the effect of keeping the category fresh while freeing up needed shelf space.
Sales promotion can help retailers limit out-of-stock situations by allowing them to purchase large quantities at a reduced price. This can be especially advantageous to the retailer for items that are popular sellers that can be difficult to keep on the shelf.
Chris Joseph writes for websites and online publications, covering business and technology. He holds a Bachelor of Science in marketing from York College of Pennsylvania.