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The concept of sales promotion encompasses all measures that promote sales in trade within the framework of marketing-based communication policy. All market participants are involved. Retailers are counted among these, as well as sales or consumers.
Sales promotion includes a large number of individual actions aimed at improving sales results. The activities are usually limited in time and can be directed either to retailers, consumers or sales organizations.
The main objective is to increase sales and profit. At the same time, however, many manufacturers and retailers aim at increasing the awareness of the company and attracting new buyers and existing buyers. Trade promotion, on the other hand, is specifically intended to have retailers distribute a manufacturer’s products, increase acceptance, and promote the products of the manufacturer.
Types of sales promotion
There are three types of sales promotion, each focused on different market participants.
These are special actions addressed by the manufacturer to retailers. It aims to carry out sales promotion together with the retailer in their business. The purpose is to get the retailer promoting the manufacturer’s products and include them in a larger quantity in their range of products being sold.
Examples of trade promotions
- Offer of sales aids such as brochures, catalogs or flyers
- Provision of advertising material, such as displays for product presentation at the point of sales (POS)
- Partial payment of advertising costs
This type of promotion is always aimed at the end user, but can be conducted by the manufacturer or the retailer. The objective is to increase sales through direct merchandising. There is a distinction between short and long-term measures in the area of consumer promotion. Short-term actions are, for example, limited-time special offers, the distribution of fliers or the issuance of coupons. In the long term, measures such as the dispatch of consumer magazines or product offers have an extended benefit.
Examples of consumer-targeted promotion
- Sweepstakes and raffles
- Free product samples
- Additions to the purchase of certain products (such as Proctor & Gamble gifts as part of a Pampers promotional action, children’s books when buying Pampers megapacks)
- Collectible stickers in chocolate bars
- Coupon promotion for supermarket customers
- Special offers and discounts
- Special price packs (such as “two for the price of one,” “now with 30 percent more content for free”)
Sales network promotion
The manufacturer tries to motivate his sales representatives or retailers to make higher sales by means of specific awards. Of course, these promotions are not limited to the sales force. Employees on site in the shop or a booking agency can also be motivated.
Examples of sales network promotion
- Sales competitions
- Bonuses with a high incentive effect (such as trips, wellness weekend, material prices)
- Continued education and sales training
If sales network promotion is planned, it is important to comply with the transparency requirement pursuant to § 4 No. 4 UWG (German Unfair Competition Act). Consequently, it would be considered “unfair” if in actions such as price rebates, gifts or bonuses, it is not clearly stated what conditions the target group has to fulfil in order to benefit. There may very well be different conditions depending on the action.
- In a McDonald’s action for the 2014 World Cup, guests had to appear in a Germany jersey to get a free burger
- Time limit for an offer (such as special offers at Lidl, which are valid only on “Super Saturdays”)
- Collecting of points for customers, but only starting at a certain purchase value
- Bonus miles for frequent flyers
If the regulations of § 4 UWG are violated, competitors can file for legal actions. They will have entitlement to information, compensation, and injunction.
Reference to Online Marketing
Sales promotion in online marketing can take place in a variety of ways and is primarily aimed at consumers. Online shops give users discounts, for example, if they subscribe to a newsletter. Other online shops specifically target those cancelling an order with vouchers for purchasing the items from the shopping cart.
Sales promotion also plays a major role in social media marketing. In Social networks, consumers can also be addressed in an emotional way via image or video material.