Sales Promotion
Given the expense of advertising and the fact that consumers are exposed to so many advertising
messages every day, many companies correctly believe that advertising alone is not enough to
get people to try a product a product or a service. Enter lower-cost sales promotion
techniques. Sales promotion refers to the variety of short-term incentives to encourage trial or
purchase of a product or a service. Examples of commonly used sales promotions include
contests, sweepstakes, coupons, premiums and gifts, product samples, rebates, low-interest
financing, price discounting, point-of-sale displays, and frequent user or loyalty
programs. [14] These promotions can be used by and offer several advantages to small
businesses:[15]
• Attracting new customers with price. A reduced price could lure customers away from the
competition. For example, a small electronics store that is competing with a large retailer could offer a
discounted price on a popular cell phone for a limited time.
• Gain community favor. By offering a promotion that helps a worthy cause, you can create a good name
for the business. Donate a portion of sales to the local food bank, buy clothing for the homeless, or donate
to the local animal shelter to help pay veterinarian bills.
• Encourage repeat purchases. Rewards and loyalty programs can be very successful for small
businesses. Coffee clubs are popular (buy so many coffees at the regular price and you get one cup free),
but this approach can work for sandwiches at a deli, bags of bird food or dog food at the local pet store,
shoe repairs at the local cobbler, dry cleaning services, and virtually any other kind of business.
• Entice reluctant customers. Giving away a free product or service is usually a good way to get people
to try a product or a service for the first time, the hope being that it will lead to a purchase. However, the
product or the service has to be good enough to stand on its own so that when the “free” unit is gone, the
person will come back to buy.
• Providing information. It can be very effective if you run a promotion that helps provide information
to potential customers to help them make a decision. This works especially well for products or services
that are complicated or unfamiliar to customers, for example, software or product usage (particularly for
business-to-business [B2B] customers), financial services, investment services, or estate planning. Free
onground seminars or webinars or webcasts (seminars or presentations that are delivered online and that
are typically an hour in length) can be very effective at gaining new customers or clients.
Sales promotions can be delivered to the customer in a variety of ways, such as snail mail (US
Postal Service), in person, in local new newspapers and regional editions of national magazines,
on television and radio, in e-mail, on websites, and in electronic coupons that are sent to a
customer’s mobile device. Groupon, which is described as the
hottest thing in retail marketing right now, offers customers coupons at local businesses:
everything from restaurants to spas to painting lessons to sleigh rides.