The Methodology of Sales Promotion

Companies use a variety of strategies and methods when implementing sales promotions. A sales promotion is essentially a form of price inducement intended to attract immediate purchases. Within a marketing communication scheme, a sales promotion contrasts long-term brand building advertising, which helps develop brand awareness in the marketplace.

The most straight-forward method of sales promotions is a simple discount or reduction in price. With this tactic, you indicate that the current price of a good or service is less than its regular price. An item normally $9.99 with a $2 discount would have a sale price of $7.99. Commonly, companies use red or yellow sale signs on shelves and show customers a comparison between the regular and discount prices.

Some promotion methods actually result in a buyer receiving free goods or services. Free trials or samples involve efforts to get customers to try stuff for free, like it and ultimately buy it. With premium promotions, you offer customers a gift or bonus item when they make a regular purchase. This method adds value to the buyer's experience. Another free promotion is the use of ad specialties, or company-branded gifts. Pens, pencils, calendars and t-shirts are common examples of branded promotional items.

Two common types of giveaway-related promotions are used to generate excitement for a company or brand. They're contests and sweepstakes. The basic difference is that a sweepstakes is a random drawing or activity and a contest requires skill, ability or something more than chance. A retailer might give away tickets to a concert or sporting event just to entice customers to the store. Companies and their publicists often provide giveaways of new products through radio station or other media promotions. A contest might require you to answer a question or guess the number of items in a jar.

Rebates are distinct in the sales promotion arena in that you have to make a purchase before you get the discount. A low redemption rate is a benefit to manufacturers and resellers that offer rebates. Many consumers won't take the time to follow-through on small-value rebate offers. Another distinct promotion that involves more than a one-time buying inducement is the loyalty program. Loyalty programs are ongoing rewards and incentives provided to regular, loyal buyers.