Creating and implementing an effective sales promotion strategy takes planning and strategic thinking. But what’s more important is knowing what the sales promotion objectives are, or why it is you are having a sales promotion. It is easy to copy other businesses who are mailing out coupons and offer a discount on a product or service item just to get the business going, but sales promotions are not just about generating short term sales. A sales promotion serves other important marketing functions that can help foster the growth of your business over the long run, versus over the duration of a sales promotion.
However, before I dive in and explain the different sales promotion objectives, I think a brief explanation of what the definition of a sales promotion is in order.
Definition of Sales Promotion
A sales promotion is one of seven aspects of the promotional mix. Some common examples of sales promotion marketing communications include consumer coupons, rebates, prizes, and loss leaders (or items sold at cost or a discount in order to attract business).
The sales promotion, for the most part, is targeted at the consumer, however, it is not uncommon for the sales promotion to be directed toward sales staff, or product distribution channels such as retail store owners or managers. When a sales promotion is directed toward the sales staff or distribution channel, more often than not, the sales promotion consists of some sort of bonus or prize reward. For example, a product manufacturer can offer owners of retail stores a chance to win a trip to some destination for selling a certain amount of the manufacturers’ products in a given time frame.
Almost all sales promotions are enlisted for a fixed amount of time. That is, they have a start date and an end date. Again, the goal of sales promotion is to promote and increase sales for a fixed amount of time. Unfortunately, as you can see that once the sales promotion ends, so do the sales, for some time that is. This is due to customers stocking up on sale items and not having a need for the items for some time after the end of the sales promotion. For service-oriented businesses who may run a sales promotion, they may gain new customers, for only the period of the sales promotion, but may never see those customers again. For example, a small coffee house offering a free cup of coffee may only receive new customers during the promotion, but not ever see those customers again, thus, a failed sales promotion and loss of money due to the free coffee. This is why it is important to understand the sales promotion objectives and come to understand that a sales promotion is not necessarily just for increasing sales over a specified time period.
Sales Promotion Objectives for Increasing Your Sales
These sales promotion objectives, below, are seven objectives for helping your business increase its sales, and bottom line, using sales promotion. While it is possible to utilize all seven objectives in any given sales promotion campaign, it is not necessary to do so since some promotion campaigns may not be suitable for some objectives.
This is perhaps the most common sales promotion objective and most understood by businesses. Every business’s objective is to increase sales and ultimately profits, after all, why have a sales promotion if you are not going to increase revenue?
Some ways of increasing sales through these sales promotion objectives may include:
- rewarding loyal customers – You may already have a loyal customer base, but want to continue to reinforce patronage and buying of your products by rewarding them with an extra discount on purchases or by providing free products as in the AMPM Mini mart promotion by ARCO. The premise of this sales promotion is that the customer is rewarded with a free drink of their choice after they have purchased 3 previous drinks.
- generating trials among new customers –Another possible way to increase sales would be to target new customers. You may offer new customers a discount on a product or service. This is often seen when apartment complexes offer new tenants one free month of rent in order to entice them to move in. The offer does not apply to existing customers or renters.
Develop New Sales Leads
Another one of the sales promotion objectives is to develop new sales leads. Depending on your business, you may be able to require your customers or potential customers to complete a survey or fill out a form on your website or from an information packet. In turn for their response, you may reward them with a discount or free product. You can then utilize this information at a later date to keep the customer informed about new sales promotions and/or products.
Build a Customer Database
Just like the example above, where a business can use a sales promotion to generate new leads, a business can also use the sales promotion to build an existing customer database. You can provide customers with a buying incentive such as a discount in exchange for them registering for a special customer club.
For example, Ralph’s Supermarket collects information from customers into their database and in turn is able to target their customers with specific product promotions.
One example of this sales promotion objective is the concept at Ralph’s supermarket. The retail store chain gathers information from customers, such as mailing address and phone number. In exchange, they provide products to customers at a lesser price than individuals who do not enroll in their rewards club. As a result of collecting this data, the supermarket giant can target their customers with special promos from food manufacturers; food products hat the customers purchase on a regular basis. What Ralph’s has done is to build a customer database on consumer buy behavior.
Move Excess Stock
Sometimes a business, especially retail stores, may have purchased excess stock on a particular item, or perhaps the manufacturer has produced too much of a particular item. A sales promotion can be employed to move the excess stocked item and in the process, it will make, at least their money back, and perhaps acquire new customers.
A not so common, yet effective strategy from the sales promotion objectives list is the concept of blocking your competitors. What I mean is that this sales promotion aims to get consumers to stock up on items that they will not need to purchase from the competition. For example, a retail supermarket chain may run a special on canned food items. The customer may run out and make the purchase of 10 or 20 cans of a particular food item in the sales promotion and will not need to purchase these items from the retail store or competitors anytime soon. The downside is that the customers will not need to purchase the promotion items from both the original retailer or the competition.
Match Competitors Price
It is very common for businesses to price match their competitor’s prices. This is one of the more effective sales promotion objectives because it keeps your loyal customers from going to the competition because of the price. Let’s face a dose of reality here, if a competitor has a comparable or same product, but is running a sales promotion and selling the item at a significant discount, your loyal customer, will temporarily become the competitor’s loyal customer. With stores that have a price matching policy, they can retain customers who would normally price shop.
While the primary goal of these sales promotion objectives is to increase sales and ultimately help your bottom line, if executed properly, the sales promotion will help generate publicity and ultimately create brand awareness. However, if all you are doing is creating sales promotions, the publicity you generate could not be favorable for your business.
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