A sales promotion is an incentive that is offered to a consumer or potential business customer to spur the purchase of a product or service. Many companies use sales promotion strategies to produce a short-term increase in sales. A company can offer many types of sales promotion activities including free samples, coupon, discounts, premiums, product demonstrations, point-of-purchase (POP) materials and even refunds or rebates.
Many companies use free samples to introduce a new product. Free samples may be sent in the mail, distributed with the Sunday newspaper or given away in a store. Food companies in particular may want people to try a new sausage or pastry. Hence, they will often hire a marketing research agency to cook, cut and pass out free food samples. The objective of free samples is to get consumers to taste the food and make a purchase. Ultimately, a company wants to acquire those people as regular customers.
Some companies use loyalty programs as sales promotions, which entice customers to make more purchases. Loyalty programs usually include a membership card that can be tracked electronically through register purchases. For example, a movie theater may offer free popcorn, drinks or even tickets to customers who spend a certain amount of money.
Premiums are a very popular sales promotional activities that provide giveaways to consumers. Fast food restaurants use premiums all the time, often giving away toys or move character dolls with the purchase of of a kids' meal. Sometimes non-competing companies go into cahoots with one another in a sales promotion. For example, a manufacturer of mouthwash may give away floss, which is another part of oral hygiene.
Sweepstakes are another type of sales promotional activity. Magazine publishers have been using sweepstakes for years to boost subscriptions. Sweepstakes usually have to be significant enough to entice massive numbers of people to make a purchase. Money, cars and even computers are used in sweepstakes sales promotions.
Product demonstrations or demos is another effective sales promotion activity. Product demonstrations are sometimes implemented to show customers how to use new or more technical products. Sometimes, a demo like a computer terminal will be set up for people to try it out. Other times a person like a model will be used to demonstrate a product. A product demo display may run without intervention to explain the various features.