A sales promotion can be defined as a paid non personal form of communication that incentives customers to visit a store and /or purchase merchandise during a specific period of time. Sales promotion helps a retailer by way of attracting customer traffic and enables quick results to be achieved. Depending on the type of promotion carried out, it can help increase impulse buying generate excitement and motivate other channel members.
However, it should be remembered that too many promotions might detract from a retailer’s image and the customer may end up waiting for a promotion to make the purchases. A retailer may create sales promotions targeted at consumers or for other channel members.
Sales Promotions aimed at consumers
A retailer may create sales promotion aimed at the consumer due to various reasons. Some of these reasons are listed below:
To stimulate trial purchases: This is usually done when a firm wants to attract new customers. A reduced price or a rebate may induce trial purchases.
To encourage repeat purchases: In package coupons valid for the next purchase are examples of promotions aimed at encouraging repeat purchases.
To encourage larger purchases: Price reductions, two for the price of one, a discount on the second purchase are examples of the same.
Introduce a new band / product: A sales promotion may be done to attract attention to a new product / brand or service that has been launched by the retailer and to induce trial purchase.
Counter competitor’s strategy: Through market intelligence if the retailer becomes aware of a competitor launching a new product or brand, he may want to counter that launch by introducing sales promotion.
Common retail promotions are illustrated in Figure below:
2) Referral gifts
3) 2 for the price of 1
5) Frequent shopper
Coupons: A coupon allows the buyer a reduction in price on specific merchandise or products, when the coupon is redeemed. Coupons may be delivered through newspapers magazines, post or in products. An example, of this is Domino’s Pizza which regularly sends coupons to customers through newspaper. These coupons offer a certain amount of discount on placing an order during a specified time frame.
Contest: A contest needs consumers to compete and the prizes are based on skill, though in the case of sweepstakes the customer only needs to enter in his name and the winner is determined by chance. Many retailers allow customers to enter into competitions based on the amount for which purchases have been made.
Demonstrations: Demonstrations are used to show the customers the performance capabilities of the product. Videos may also be used to aid the demonstration and show the use of products. Company executives demonstrating the use of home alliances in a supermarket is a good example of such promotions.
Product / Brand Promotions and schemes ; This is a straightforward scheme in which the consumer either gets a monetary discount on the purchase of a particular product /s or gets two products of the same type for the price of one — the buy one get one free scheme is an example of the same.
Samples: Getting consumers to simply try a brand can have an effect on decision making. Sampling provides the consumer an opportunity to use the product at no cost. Various techniques may be adopted for sampling and this may take the form of in-store sampling – where the in-store staff hands out the samples. Sampling may be door to door through mail or with newspapers and magazines.
Frequent shopper programs: Most retailers have the frequent programs, where a member accumulates points for every purchase. Members often get invitations to events sponsored by the retailer or associates.
For most retailers in India, the festival time of Durga Puja, Navratri and Diwali is a time to cash in and make the most of the consumer favorable predisposition towards buying. With a booming economy, easy interest rates, easy monthly installments and booming credit cards, the demand for products across categories has seen a boom. Some of the popular promotions seen in many cities are:
1) Jewelry Retailers: Discount on making charges, gift on purchases beyond a particular amount etc.
2) Hypermarkets: Products bundled together in an offer, Buy one get one free, etc.
3) Consumer Durable retailers: Gifts on purchases exclusive offers on certain products, facility for EMI etc.
4) Automobile retailers: Gold coin on purchase of certain vehicles in a particular stipulated time span facility for EMI, gifts on purchase etc.
Not to be outdone, countries shopping malls and multiplexes are also promoting themselves as the complete shopping offer. Many retailers create a retail calendar that lists out the promotion/ event schedule for various months. This not only helps in planning but also helps detail out responsibilities and expenses that are going to arise.