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How
To Use Sales Promotions
In
business, nobody likes, or wants to, give away something
for nothing. So how do you ensure that you are making
the right decisions when choosing your sales promotion
methods? How do you know which sales promotion technique
is best for your line of business?
The
objective of sales promotions is specific and focused.
It is mainly concerned with persuading particular target
markets to increase their consumption of your products,
in other words, buy two or three of your products when
they would normally buy one. Sales promotions provide
that extra incentive for consumers to focus their attention
on your particular product in a particular place, at a
particular time, and most importantly, buy it at that
moment.
The
following two stages are essential to the success of your
sales promotions. For a start, answering briefly the five
questions below will allow you to gain a better perspective
of the type of sales promotions that is most suitable
for you:
1)
What are the strengths, weaknesses, opportunities, threats
and positioning of your products or services?
2) What is the aim for your promotion?
3) Who is your target market?
4) What do you want your target market to do?
5) How will you evaluate the promotion?
Next,
from the list of objectives below, choose the objective(s)
that you would like to achieve with your sales promotional
activities:
(Source:
Cummins, Julian (1998), Sales Promotion, 2nd ed.
London: Kogan Page Ltd.)
1)
Increase Volume
Sales promotions for increasing volume are effective in
meeting short-term business needs. In fact, since promotions
provide consumers with an incentive to buy, almost any
type of promotions will help to increase volume. Sales
promotions for increasing volume can be aimed at first-time
users as well as regular users or even be used to break
into new markets. The emphasis of increasing volume can
either be on the intermediaries or on the final customer.
A very wide range of offers can also be used to increase
volume. (source)
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2)
Increase Trial
Consumers who have not tried your products or services
constitute a majority source of extra volume. These potential
customers or trialists probably had no prior personal
experience of your product or service. "They could even
be using one of your competitors' products or services
or none at all in your category."
(source)
Effective
promotional offers for gaining increased trial:
•
Providing a free sample or a trial coupon so that people
can try out your product or service
• Providing an additional benefit so that your product
or service seems superior to others on the market
• Providing short-term financial benefits such as
good credit rates so that it seems better value than others
• Doing something different and imaginative, such
as an open day or special event, that lifts it out of
the general run.
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3)
Increase Repeat Purchase
Repeat purchase promotions can help to increase volume
in sales as existing customers of a particular product
or service would most likely make their regular purchases
in advance and in bulk. "Repeat purchase promotions are
also effective in achieving other marketing objectives
such as spoiling the launch of a competitive product and
getting your customers into the habit of using only your
product." (source)
Effective
techniques for increasing repeat purchase:
• Coupons on the product giving discounts on the
next purchase
• Specific incentives for multiple purchase - for
example, 'buy three, get one free'.
• Collector promotions, such as collecting ten tokens
and sending for a free merchandise or cash refund offer.
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4)
Increase Loyalty
Loyalty to a product or service is subjective and personal.
However, it is also possible to buy a product or use a
service on a regular basis without feeling any loyalty
towards it and simply because it is the cheapest and the
best. The objective of increasing loyalty to a product
and service is to make your customers keep buying even
when your product or service ceases to be the cheapest
and the best. (source)
Types
of promotions that work well in building loyalty:
• Factory visits, roadshows and other direct-contact
promotions, which bring purchasers into personal contact
with the people behind the product or service.
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5)
Widen Usage
Consumers often stick to one way of using a product and
service and overlook the many other possible ways a product
and service can be used. Therefore, a company should widen
the usage of a product or service in order to capitalize
on its other uses when its original use is losing its
appeal with consumers. (source)
Sales
promotions effective in widening the usage of a product
or service:
• By physically linking the product or service with
something else already in the new usage area; for example,
issuing trial samples with another product.
• By offering books or pamphlets that are of value
in themselves and explain new ways to use the product
or service
• By creating a non-physical link with something
already in the new usage area, via coupons or joint promotions
with another company.
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6)
Create Interest
Many consumer markets are unpredictable. Consumers can
decide to buy something else or go somewhere else just
out of sheer boredom. Therefore, in order to keep your
customers, you should create interest in your products
and services and supply them with a reason to buy your
product instead of your competitors'. "It is a matter
of ringing the changes, having something fresh to offer,
and keeping interest and enthusiasm on the boil."
(source)
Effective
methods of creating interest in your customers:
• Being the first to offer a new product or service
as promotional premium.
• Linking up with a celebrity or relevant charity.
• Finding a totally new way to do something that
people enjoy doing.
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7)
Create Awareness
Generating awareness is especially useful in industries
where purchases are sporadic or for newly launched brands.
Creating awareness is a key objective for new products.
Although it has often been assumed that the best way of
creating awareness is through advertising, but creating
awareness through sales promotions is just as effective.
(source)
A
number of sales promotions that are very effective at
increasing awareness in purchasers:
• Joint promotions with another product or service
that is already well-known in a particular market
• Link-ups with charities or voluntary groups that
have a relevant image
• The production of books or educational materials
for schools and the general public
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8)
Deflecting Attention from Price
A large proportion of the consumer market is obsessed
with price and this obsession can lead to price wars and
pose a danger to your company's profitability in the long
run. Which is why a lot of companies put a lot of emphasis
in advertising. Their purpose is to replace price considerations
with product feature considerations "such as quality,
brand identity and performance". Therefore, to deflect
your target markets' attention from price, you could offer
product benefits that "justify a higher price but cost
less than an equivalent price cut". (source)
Effective
sales promotional offers to deflect attention from price:
• Variations on price cuts, ranging from 'cents off
next purchase to' and 'buy three, get one free' to cash
- back or cash share-out offers, that appear more valuable
than a straight price cut.
• Making price comparisons less direct, by offering
extra-fill packs or short-term multipacks or joint packs
or by offering part of the product or service free for
example.
• Long-term collector promotions also seem more interesting
than straight price cuts.
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9)
Gain Intermediary Support
Some products and services are sold to wholesalers, distributors,
agents, retailers and other intermediaries, while others
are just sold directly to the end-user. Whether your products
and services rely on the support of wholesalers, distributors,
agents, retailers and other intermediaries, or just on
the end-user, your business, like any other, needs the
support and recommendation of other businesses. In addition,
every business also "benefits from word-of-mouth recommendation"
by one satisfied customer to another. (source)
A
number of key sales promotional techniques used to garner
support and recommendation from your business associates
and customers:
• specific programmes directed at wholesalers, retailers,
agents and distributors to gain distribution, display
and cooperative advertising.
• 'member get member' schemes which reward customers
for introducing new people to you
• promotional events aimed at the media and other
influences on decision-making
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10)
Gain Display
Gaining display is a central objective for promotions
by retailers. The display of products and services takes
the forms of: point-of-purchase materials such as stand-up
displays, posters, banners and price cards. Gaining display
is all about "achieving extra prominence" for your products
or services. (source)
A
number of promotional techniques effective for achieving
display:
• Incentives directed at store managers and sales
assistants
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