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{{Short description|Short-term incentive to initiate trial or purchase}}
In ], '''sales promotion''' is one of the four aspects of ]. (The other three parts of the ] are ], ], and ]/].) Sales promotions are non-personal promotional efforts that are designed to have an immediate impact on sales. Sales promotion is media and non-media marketing communications employed for a pre-determined, limited time to increase consumer demand, stimulate market demand or improve product availability. Examples include:
{{marketing}}
'''Sales promotion''' is one of the elements of the ]. The primary elements in the promotional mix are ], ], ] and ]/]. Sales promotion uses both media and non-media marketing communications for a predetermined, limited time to increase consumer demand, stimulate market demand or improve product availability. Examples include ]s, ]s, ], ]s, ] displays, ]s, ], ]s, and ].


Sales promotions can be directed at either the ], sales staff, or ] channel members (such as ]s). Sales promotions targeted at the ] are called '''consumer sales promotions'''. Sales promotions targeted at retailers and ] are called '''trade sales promotions'''.
* ]
* ] and sales
* ]
* ] displays
* ]
* gifts and incentive items
* free travel, such as free flights


Sales promotion includes several communications activities that attempt to provide added value or incentives to consumers, wholesalers, retailers, or other organizational customers to stimulate immediate sales. These efforts can attempt to stimulate product interest, trial, or purchase. Examples of devices used in sales promotion include coupons, samples, premiums, point-of-purchase (POP) displays, contests, rebates, and sweepstakes.
Sales promotions can be directed at either the ], sales staff, or ] channel members (such as ]). Sales promotions targeted at the ] are called '''consumer sales promotions'''. Sales promotions targeted at retailers and ] are called '''trade sales promotions'''. Some sale promotions, particularly ones with unusual methods, are considered ] by many.
== Consumer sales promotion techniques ==
*Price deal: A temporary reduction in the price, such as ]
*Loyalty rewards program: Consumers collect points, miles, or credits for purchases and redeem them for rewards. The two most famous examples are ] and ].
*Cents-off deal: Offers a brand at a lower price. Price reduction may be a percentage marked on the package.
*Price-pack deal: The packaging offers a consumer a certain percentage more of the product for the same price (for example, 25 percent extra).
*Coupons: coupons have become a standard mechanism for sales promotions.
*]: the price of a popular product is temporarily reduced in order to stimulate other profitable sales
* Free-standing insert (FSI): A coupon booklet is inserted into the local newspaper for delivery.
* On-shelf couponing: Coupons are present at the shelf where the product is available.
* Checkout dispensers: On checkout the customer is given a coupon based on products purchased.
* On-line couponing: Coupons are available on line. Consumers print them out and take them to the store.
* ]: Consumers are offered money back if the receipt and ] are mailed to the producer.
* Contests/sweepstakes/games: The consumer is automatically entered into the event by purchasing the product.
* Point-of-sale displays:
** Aisle interrupter: A sign the juts into the aisle from the shelf.
** Dangler: A sign that sways when a consumer walks by it.
** Dump bin: A bin full of products dumped inside.
** Glorifier: A small stage that elevates a product above other products.
** Wobbler: A sign that jiggles.
** Lipstick Board: A board on which messages are written in crayon.
** Necker: A coupon placed on the 'neck' of a bottle.
** YES unit: "your extra salesperson" is a pull-out ].


Sales promotion is implemented to attract new customers, hold present customers, counteract competition, and take advantage of opportunities that are revealed by market research. It is made up of activities, both outside and inside activities, to enhance company sales. Outside sales promotion activities include advertising, publicity, public relations activities, and special sales events. Inside sales promotion activities include window displays, product and promotional material display and promotional programs such as premium awards and contests.<ref>{{cite book|title = How to start and succeed in a business of your own |first=John| last=Taylor | year = 1978| page=290}}</ref>
===Promotional Pricing ]===
One of the most frequently used sales promotional techniques is that of offering promotional discounts; `buying' extra sales - albeit only in the short term. These can be grouped into a number of main categories:
*Price reductions - The simple `money-off' promotion is the most direct and hence may have the most immediate impact on sales levels. As it is shown on the `pack', it is also difficult for any retailer to avoid passing it on to the consumer. It is the most expensive technique, because to be effective it usually needs to represent 15 to 20 per cent off the regular retail price. It may also prove difficult to restore the price to its original level at the end of the promotion, as consumers, and in particular retailers, may decide to stock-pile in order to hold off their purchases until the next promotion. It may also do considerable damage to the image of quality products or services, especially where the price-off `burst' or `flag' may visually dominate the label.
*Free goods - The offer of more product for the same price has a number of advantages. It often costs the supplier significantly less than a price cut, and it forces the customer to buy more than usual; possibly setting a new pattern of usage. Also, it possibly has less impact on the established price; although it can set an awkward precedent.
*Banded offers - Two or more products, often banded together using adhesive tape, almost invariably at a lower price (although one product may be offered as a `premium') are typically meant to offer greater `value'; but this normally poses problems in terms of requiring changes to the production lines - often with considerable reductions in productivity.
*Vouchers or coupons - Where the aim is to extend the penetration (or trial) of the product or service to new customers (particularly in the case of a new product launch), coupons are often used. They are most effectively delivered door-to-door, where they achieve high redemption rates. They may also be incorporated in Press advertisements - which are cheaper to run but have a considerably lower redemption rate. Depending upon the generosity of the offer, this is supposed to tempt consumers away from their existing brands to try the new one. This can be a very effective type of promotion if coupon redemption levels are high enough, and may be more cost-effective than sampling; and it clearly has only limited impact on the prices paid by existing customers.
*Cash refund - A cash refund (from the retailer or by mail), usually on the basis of a `voucher' which is attached to, or is part of, the pack, is a way of offering a controlled price reduction. On the other hand, the redemption procedures may be complex (and unwelcome to the trade). It can also be expensive: sometimes (when `trial' is being sought) the refund may even be as much as the whole purchase price, although the redemption rates reported (of only a few per cent) indicate that many purchasers never redeem the offers - and so actual costs may be significantly reduced.
*Money off next purchase - A somewhat similar coupon offer, this time on the label of the product itself, may be used to extend buying patterns; and build customer loyalty.


Sale promotions often come in the form of discounts. Discounts impact the way consumers think and behave when shopping. The type of savings and its location can affect the way consumers view a product and affect their purchase decisions.<ref name=Yin>{{cite journal|last1=Yin|first1=Xu|last2=Jin-Song|first2=Huang|title=Effects Of Price Discounts And Bonus Packs On Online Impulse Buying|journal=Social Behavior & Personality |date=2014|volume=42|issue=8|pages=1293–1302|doi=10.2224/sbp.2014.42.8.1293}}</ref> The two most common discounts are price discounts ("on sale items") and bonus packs ("bulk items").<ref name=Yin /> Price discounts are the reduction of an original sale by a certain percentage while bonus packs are deals in which the consumer receives more for the original price.<ref name=Yin /> Many companies present different forms of discounts in ], hoping to convince consumers to buy their products.
*Loss leader pricing - In the case of the service and distribution industries, a product or service may actually be priced below cost in order to attract customers into the branch, in the hope that they will buy other products or services which 'are' profitable.
*Cheap credit - Where credit is offered, lower-priced or even free credit may be used instead of a simple price reduction. This may be cheaper to the vendor who has access to cheaper lines of credit (although the cost of bad debts must also be covered). It may be particularly attractive to the more naive consumer who sees it as a way of getting something now, and paying later. It may also be a means of introducing the consumer to the use of the supplier's credit facilities.
*Special events - Certain sectors of the retail trade offer `special', usually seasonal, events to encourage buying during periods of traditionally low turnover.


== Definition ==
===Non-price Promotions ]===
Sales promotion represents a variety of techniques used to stimulate the purchase of a product or brand. Sales promotion has a tactical, rather than strategic role in marketing communications and ], it is also a form of advertisement used within a short period of time. Researchers Farhangmehr and Brito reviewed the definitions of sales promotions in marketing texts and journals and identified a set of common characteristics of sales promotion, including:<ref>Farhangmehr M. and Brito P.Q.. "Sales Promotions: Prescriptive Definitions and the Managers View,". In: Sidin S., Manrai A. (eds), ''Proceedings of the 1997 World Marketing Congress. Developments in Marketing Science: Proceedings of the Academy of Marketing Science,'' Springer, Cham, 2015, pp 45-49</ref>
* Short-term effects and duration;
There are a number of other forms of promotion which aim to offer `added value', but which are not so directly price-related:
* Operates and influences only the last phase of the purchase process;
* Exhibits a secondary role in relation to other forms of marketing communication;
*Competitions - In this case the purchaser receives the right to one or more entries in a competition. Exceptionally, if the main prize is very large (and it is the size of the top prize which reportedly determines the interest of the consumer), this can be a very attention-getting form of promotion. It can be very easy and cheap to mount, and has a guaranteed fixed maximum cost. In its normal form, though, it has a lower level of interest for the consumer, with a low `redemption' rate; and is now often just used as a means of gaining extra in-store impact.
* Performs an accessory role regarding the product's core benefits
* Is not a single technique, rather it is a set of techniques used for a specific purpose
*Personality promotions - In former times, in particular, teams of `sales promoters' toured the country (sometimes dressed in the most outlandish of costumes), offering incentives such as `instant prizes' to potential users. More recently, this has been largely superseded by `in-store promotions', staffed by personnel who are usually part-timers employed by specialist agencies. The process can be expensive, and difficult to control, although it may occasionally generate some of the benefits of face-to-face selling.
]
*Free gifts and mail-ins - These give the customer an additional offer (a `giveaway' either `on-pack', or at point of sale, or by mailing in). They can be expensive to run (depending on the value of the `free offer'). The technique can be used to establish repeat purchase if a 'number' of coupons (and hence packs) have to be collected. However, the administration can be complex, and additional sales may just come from heavy users buying forward. A special form of the `giveaway' is one where the container itself is `reusable' (for instance, a shelf-storage jar containing instant coffee). Such free gifts are not restricted to FMCG products. Some banks, for example, have offered free legal help and surveys to those taking out a mortgage.
*Self-liquidating offers - In this case the offer is not free, as a result of which some writers call it a `premium' offer. Like a competition it can add interest and the impression is usually given that the supplier is subsidizing the offer, so that the customer will obtain a good deal on the item. In practice, the intention is usually to cover the cost within the amount paid by the customer; in effect offering the customer only the benefit of the supplier's buying power (or the special deal which has been negotiated). It is now seen as having low consumer interest and is only used in the few situations in which such marginal impact is worthwhile; though there would appear to be few of these. It can also have significant hidden costs, since it is difficult to administer; and forecasting stock levels is a very problematic experience.
*Multibrand promotions - A number of brands, typically from one supplier, share a single promotion, in order to maximize impact for given costs. This technique can be used to recruit new users to these other brands, but it will only work well if all these brands are in widespread distribution, and there is some logic to the link.
===Sampling ]===
This is generally the most powerful form of promotion for `new products', the immediate aim being to obtain `trial' by users. It is normally used as one of the very early elements in a launch.
It is a very expensive promotional device; often less cost-effective than any of the other forms of promotion. But it is the most effective, direct and immediate way of obtaining consumer trial. Retailers also recognize its power to pull in customers, and it may accordingly also help to achieve distribution. Indeed, it is often combined with a money-off voucher, to ensure that a successful trial is rapidly followed by a purchase.


Both manufacturers and retailers make extensive use of sales promotions. Retailer-sponsored sales promotions are directed at consumers. Manufacturers use two types of sales promotion, namely:<ref name="Gedenek, K. pp.345-359">Gedenek, K., Geslin, S.A. and Ailawadi, S.L., "Sales Promotion," in: Krafft, M. and Mantra, M.K. (eds), ''Retailing in the 21st Century: Current and Future Trends,'' pp.345-359</ref>
== Trade sales promotion techniques ==


:1. ''Consumer sales promotions'': Sales promotions targeted at consumers or end-users and designed to stimulate the actual purchase
* Trade allowances: short term incentive offered to induce a retailer to stock up on a product.
:2. ''Trade promotions'': Sales promotions targeted at trade, especially retailers, designed to increase sales to retailers, to carry the product or brand or to support the retailer in consumer-oriented promotions
* Dealer loader: An incentive given to induce a retailer to purchase and display a product.
* Trade contest: A contest to reward retailers that sell the most product.
* Point-of-purchase displays: Extra sales tools given to retailers to boost sales.
* Training programs: dealer employees are trained in selling the product.
* Push money: also known as "spiffs". An extra commission paid to retail employees to push products.


Sales promotion is useful when:
==Advantages and Disadvantages of Sales Promotion ]==
:1. The product is newly introduced.
:2. There is excess inventory.
Despite its reent widespread use as the an important element of marketing campaigns, at least in terms of money spent, the essence of sales promotion is that it is intended as a very short-term influence on `sales': it typically has an insignificant long-term effect, but may be used as a powerful additional factor, included in the competitive balance, in the short term, to sway sales in the supplier's favour, and to bring forward sales.
:3. Penetration or entry into a competitors stronghold.
:4. The product are likely to be perished if not sold or used.
===Advantages===
*sales increase - the main short-term benefit
*defined target audience - it can be targeted on specific groups (especially selected retailers and their customers)
*defined role - it can also be targeted to achieve specific objectives, such as increasing repeat purchase
*indirect roles - it can also be used to achieve other objectives, such as widening distribution or `shelf facings'
===Disadvantages===
*short term - almost all of the effect is immediate. There is rarely any lasting increase in sales
*hidden costs - many costs, not least the management/salesforce time and effort, do not appear in the direct costs
*confusion - promotions can conflict with the main brand messages, and confuse the customer as to what the image really is.
*price-cutting - which can persuade users to expect a lower price in future, and potentially damage `quality'
Perhaps its greatest disadvantage, though, may be the lack of effectiveness. Abraham and Lodish reported that:
"... only 16% of the trade promotion events we studied were profitable, based on incremental sales of brands distributed through retailer warehouses. For many promotions the cost of selling an incremental dollar of sales was 'greater' than one dollar."
In line with its essentially short-term objectives, a promotion
may realistically be expected to achieve a number of limited
objectives:
*Trial purchase - Some promotions are expressly planned to induce consumers to try the product or service. The classic example is that of `money-off' coupons, or samples of the product, at the time of the launch (possibly `banded' as a free gift on a related product).
*Extra volume - Other promotions are designed to stimulate the user's decision at point of sale; on-pack price cuts are the obvious example. It may often be found that a cheaper alternative is to offer more of the product (`free 20% extra') for the same price.
*Repeat business - Yet others are meant to build repeat business. A good example is that of `money off next purchase' coupons.
*Point of sale impact'. Free gifts, for example, may provide additional interest for an advertising campaign, or a competition may lead to a better display at the point of sale; but it is the extra shelf space that sells the product, rather than the promotion itself.
It should be added that sales promotion and advertising (or, indeed, any of the other forms of promotion) are complementary; and the most effective, well-balanced, campaign will often
include a mix of several types of promotion.


The effect of sales promotion may not persist unless other marketing is used to create brand loyalty.{{Citation needed |date=May 2024}}
== Political issues ==


== Types ==
Sales promotions have traditionally been heavily regulated in many advanced industrial nations, with the notable exception of the ]. For example, ] formerly operated under a "resale price maintenance" regime in which manufacturers could legally dictate the minimum resale price for virtually all goods; this practice was abolished in 1964.<ref>Stuart Mitchell, "Resale price maintenance and the character of resistance in the conservative party: 1949-64," ''Canadian Journal of History'' 40, no. 2 (August 2005): 259-289.</ref>
Consumer sales promotions are short-term techniques designed to achieve short-term objectives, such as to stimulate a purchase, encourage store traffic or simply to build excitement for a product or brand. Traditional sales promotions techniques include:
* Price deal: A temporary reduction in the price, such as 50% off.
* Loyal Reward Program: Consumers collect points, miles, or credits for purchases and redeem them for rewards.
* Cents-off deal: Offers a brand at a lower price. The price reduction may be a percentage marked on the package.
* Price-pack/Bonus packs deal: The packaging offers a consumer a certain percentage more of the product for the same price (for example, 25 percent extra). This is another type of deal "in which customers are offered more of the product for the same price".<ref name=Yin /> For example, a sales company may offer their consumers a bonus pack in which they can receive two products for the price of one. In these scenarios, this bonus pack is framed as a gain because buyers believe that they are obtaining a free product.<ref name=Yin /> The purchase of a bonus pack, however, is not always beneficial for the consumer. Sometimes consumers will end up spending money on an item they would not normally buy had it not been in a bonus pack. As a result, items bought in a bonus pack are often wasted and is viewed as a "loss" for the consumer.
* Coupons: Coupons have become a standard mechanism for sales promotions.
* ]: The price of a popular product is temporarily reduced below cost in order to stimulate other profitable sales
* Free-standing insert (FSI): A coupon booklet is inserted into the local newspaper for delivery.
* Checkout dispensers: On checkout, the customer is given a coupon based on products purchased.
* Mobile couponing: Coupons are available on a mobile phone. Consumers show the offer on a mobile phone to a salesperson for redemption.
* Online interactive promotion game: Consumers play an interactive game associated with the promoted product.
* ]: Consumers are offered a money-back if the receipt and ] are mailed to the producer.
* Contests/sweepstakes/games: The consumer is automatically entered into the event by purchasing the product.
* Point-of-sale displays:
** Aisle interrupter: A sign that juts into the aisle from the shelf.
** Dangler: A sign that sways when a consumer walks by it.
** Dump bin: A bin full of products dumped inside.
** Bidding portals: Getting prospects
** Glorifier: A small stage that elevates a product above other products.
** Wobbler: A sign that jiggles.
** Lipstick Board: A board on which messages are written in crayon.
** Necker: A coupon placed on the 'neck' of a bottle.
** YES unit: "Your extra salesperson" is a pull-out ].
** Electroluminescent: Solar-powered, animated light in motion.
* Kids eat free specials: Offers a discount on the total dining bill by offering 1 free kids meal with each regular meal purchased.
* Sampling: Consumers get one sample for free, after their trial and then could decide whether to buy or not.


New technologies have provided a range of new opportunities for sales promotions. Loyalty cards, personal shopping assistants, electronic shelf labels, and electronic advertising displays allow for more personalized communications and more targeted information at the point of purchase. For example, shoppers may receive alerts for special offers when they approach a product in a specific aisle.<ref name="Gedenek, K. pp.345-359"/>
Most European countries also have controls on the scheduling and permissible types of sales promotions. ] is notorious for having the most strict regulations. Famous examples include the car wash that was barred from giving free car washes to regular customers and a baker who could not give a free cloth bag to customers who bought more than 10 rolls.<ref>Anonymous, "Handcuffs on the high street," ''The Economist'' 355, no. 8170 (] ]): 62.</ref>


=== Online deals vs. In-store deals ===
==See also==
There are different types of discounts available online versus in the stores. On-shelf couponing: Coupons are present at the shelf where the product is available. On-line couponing: Coupons are available online. Consumers print them out and take them to the store. Although discounts can be found online and in stores, there is a different thought process when shopping in each location. For example, "online shoppers are more price-sensitive because of the readily available low search cost and direct price comparisons".<ref name=Yin /> Consumers can easily go to ] as opposed to physically going to various stores.<ref name=Yin /> In addition, buyers tend to refrain from purchasing bonus packs online because of the skepticism (of fraud and scams) that may come with the deal.<ref name=Yin /> Since "...bonus packs are more difficult than price discounts to process online, they are more difficult and effortful for the consumer to understand".<ref name=Yin /> For example, a buy-one-get-one-free deal on a website requires more work than the same bonus pack offered in a store. Online, consumers have to deal with payment processing, shipping and handling fees, and days waiting for the products' arrival, while in a store, the products are available without those additional steps and delays.
*]
*]
*]
*]
*]


== Trade promotion techniques ==
==References==
* Trade allowances: Short-term incentive offered to induce a retailer to stock up on a product.
<references/>
* Dealer loader: An incentive given to induce a retailer to purchase and display a product.
* Trade contest: A contest to reward retailers that sell the most product.
* Point-of-purchase displays: Used to create the urge of "impulse" buying and selling your product on the spot.
* Training programs: Dealer employees are trained in selling the product.
* Push money: Also known as "spiffs." An extra commission paid to retail employees to push products.
* Trade discounts (also called functional discounts): These are payments to distribution channel members for performing some function.


== Consumer thought process ==
3. M. M. Abraham and L. M. Lodish, Getting the most out of advertising and promotion, 'Harvard Business Review' (May-June 1990)


=== Meaningful savings: gain or loss ===
Many discounts are designed to give consumers the perception of saving money when buying products, but not all discounted prices are viewed as favorable to buyers. Therefore, before making a purchase, consumers may weigh their options as either a gain or a loss to avoid the risk of losing money on a purchase.<ref name=Isabella>{{cite journal|last1=Isabella|first1=Giuliana|title=Influence Of Discount Price Announcements On Consumer's Behavior|journal=Revista de Administração de Empresas|date=2012|volume=52|issue=6|pages=657–671|doi=10.1590/s0034-75902012000600007|url=http://www.producao.usp.br/bitstream/BDPI/38241/1/S0034-75902012000600007.pdf|doi-access=free}}</ref> A "gain" view on a purchase results in chance taking<ref name=Isabella /> For example, if there is a buy-one-get-one-half-off discount that seems profitable, a shopper will buy the product. On the other hand, a "loss" viewpoint results in consumer aversion to taking any chances.<ref name=Isabella /> For instance, consumers will pass on a buy-three-get-one-half-off discount if they believe they are not benefitting from the deal. Specifically, consumers will consider their options because "...the sensation of loss is 2.5 times greater than the sensation of gain for the same value".<ref name=Isabella />

=== Impulse buying ===
Impulse buying results from consumers' failure to weigh their options before buying a product. Impulse buying is "any purchase that a shopper makes that has not been planned... sudden and immediate".<ref name=Yin /> For example, if a consumer has no intention of buying a product before entering a store, but purchases an item without any forethought, that was impulse buying. Product manufactures want to promote and encourage this instant purchase impulse in consumers. Buyers can be very quick to make purchases without thinking about the consequences when a product is perceived to be a good deal.<ref name=Yin /> Therefore, sales companies "increasingly implement promotional campaigns that will be effective in triggering consumer impulse buying behavior" to increase sales and profits<ref name=Yin />

=== Comparing prices ===
Many consumers read left-to-right, and therefore, compare prices in the same manner.<ref name=Coulter>{{cite journal|last1=Coulter|first1=Keith|last2=Coulter|first2=Robin|title=Distortion Of Price Discount Perceptions: The Right Digit Effect|journal=Journal of Consumer Research|date=2007|volume=34|issue=2|pages=162–173|doi=10.1086/518526|s2cid=43734022 |url=http://pdfs.semanticscholar.org/04f4/90fc4bbba00352fad78ca2251091e4e265c2.pdf|archive-url=https://web.archive.org/web/20190217104604/http://pdfs.semanticscholar.org/04f4/90fc4bbba00352fad78ca2251091e4e265c2.pdf|url-status=dead|archive-date=2019-02-17}}</ref> For example, if the price of a product is $93 and the sales price is $79, people will initially compare the left digits first (9 and 7) and notice the two digit difference.<ref name=Coulter /> However, because of this habitual behavior, "consumers may perceive the ($14) difference between $93 and $79 as greater than the ($14) difference between $89 and $75".<ref name=Coulter /> As a result, consumers often mistakenly believe they are receiving a better deal with the first set of prices based on the left digits solely.<ref name=Coulter />

=== Right digit effect ===
The right digit effect focuses on the right digits of prices when the left digits are the same.<ref name=Coulter /> In other words, prices like $45 and $42 force consumers to pay more attention to the right digits (the 2 and 5) to determine the discount received. This effect also "implies that consumers will perceive larger discounts for prices with small right digit endings, than for large right digit endings.<ref name=Coulter /> For example, in a $32-to-$31 price reduction, consumers will believe to have received a greater deal than a $39-to-$38 price reduction. As a result, companies may use discounts with smaller right digits to mislead consumers into thinking they are receiving a better deal and increasing profit. However, consumers also are deceived by the infamous 9-ending prices.<ref name=Coulter /> "The right digit effect relates to consumers' tendency to identify 9-ending prices as sale (rather than regular) prices or to associate them with a discount.<ref name=Coulter />

=== Framing effect ===
The ] is "the phenomenon that occurs when there is a change in an individual's preference between two or more alternatives caused by the way the problem is presented".<ref name=Isabella /> In other words, the format in which something is presented will affect a person's viewpoint. This theory consists of three subcategories: risky choice framing, attribute framing and goal framing.<ref name=McKechnie>{{cite journal|last1=McKechnie|first1=Sally|title=Effects Of Discount Framing In Comparative Price Advertising|journal=European Journal of Marketing|date=2012|volume=46|issue=11/12|pages=1501–1522|doi=10.1108/03090561211259952|url=https://irep.ntu.ac.uk/id/eprint/47874/1/1632829_Devlin.pdf }}</ref> Risky choice framing references back to the gain-or-loss thought processes of consumers.<ref name=Isabella /><ref name=McKechnie /> Consumers will take chances if the circumstance is profitable for them and avoid chance-taking if it is not. Attribute framing deals with one key phrase or feature of a price discount that is emphasized to inspire consumer shopping.<ref name=McKechnie /> For example, the terms "free" and "better" are used commonly to lure in shoppers to buy a product. Goal framing places pressure on buyers to act hastily or face the consequences of missing out on a definite price reduction.<ref name=McKechnie /> A "limited time only" (LTO) deal, for example, attempts to motivate buyers to make a purchase quickly, or buy on impulse, before the time runs out.<ref name=McKechnie />

=== Outside forces ===
Although there are aspects that can determine a consumer's shopping behavior, there are many outside factors that can influence the shoppers' decision in making a purchase. For example, even though a product's price is discounted, the quality of that product may dissuade the consumer from buying the item.<ref name=Isabella /> If the product has poor customer reviews or has a short "life span," shoppers will view that purchase as a loss and avoid taking a chance on it. A product can also be viewed negatively because of consumers' past experiences and expectations.<ref name=Isabella /> For example, if the size of a product is misleading, buyers will not want to buy it. An item advertised as "huge," but is only one inch tall, will ward off consumers. Also, "the effects of personal characteristics, such as consumers' gender, subjective norms, and impulsivity" can also affect a consumer's purchase intentions.<ref name=Yin /> For example, a female will, generally, purchase a cosmetic product more often than a male. In addition, "some...shoppers may be unable to buy ...because of financial constraints".<ref name=Yin />

== Regulation ==
Sales promotions have traditionally been heavily regulated in many advanced industrial nations, with the notable exception of the ]. For example, the ] formerly operated under a ] regime in which manufacturers could legally dictate the minimum resale price for virtually all goods; this practice was abolished in 1964.<ref>Stuart Mitchell, "Resale price maintenance and the character of resistance in the conservative party: 1949-64," ''Canadian Journal of History'' 40, no. 2 (August 2005): 259-289.</ref>

Most European countries also have controls on the scheduling and permissible types of sales promotions, as they are regarded in those countries as bordering upon ]. ] is notorious for having the most strict regulations. Famous examples include the car wash that was barred from giving free car washes to regular customers and a baker who could not give a free cloth bag to customers who bought more than 10 rolls.<ref>{{cite news |author=Anonymous |url= http://www.economist.com/business/displaystory.cfm?story_id=333673 |title=Handcuffs on the high street |newspaper=The Economist |date=May 13, 2000}}</ref>

== See also ==
* ]
* ]
* ]
* ]
* ]
* ]
* ]
* ]
* ]
* ]
* ]
* ]
* ]
* ]

==References==
{{Commons category}}
{{Reflist}}


{{Media manipulation}}
]]
{{Authority control}}
]


]
]

Latest revision as of 20:45, 27 November 2024

Short-term incentive to initiate trial or purchase
Marketing
Key concepts
Promotional content
Promotional media
Research

Sales promotion is one of the elements of the promotional mix. The primary elements in the promotional mix are advertising, personal selling, direct marketing and publicity/public relations. Sales promotion uses both media and non-media marketing communications for a predetermined, limited time to increase consumer demand, stimulate market demand or improve product availability. Examples include contests, coupons, freebies, loss leaders, point of purchase displays, premiums, prizes, product samples, and rebates.

Sales promotions can be directed at either the customer, sales staff, or distribution channel members (such as retailers). Sales promotions targeted at the consumer are called consumer sales promotions. Sales promotions targeted at retailers and wholesale are called trade sales promotions.

Sales promotion includes several communications activities that attempt to provide added value or incentives to consumers, wholesalers, retailers, or other organizational customers to stimulate immediate sales. These efforts can attempt to stimulate product interest, trial, or purchase. Examples of devices used in sales promotion include coupons, samples, premiums, point-of-purchase (POP) displays, contests, rebates, and sweepstakes.

Sales promotion is implemented to attract new customers, hold present customers, counteract competition, and take advantage of opportunities that are revealed by market research. It is made up of activities, both outside and inside activities, to enhance company sales. Outside sales promotion activities include advertising, publicity, public relations activities, and special sales events. Inside sales promotion activities include window displays, product and promotional material display and promotional programs such as premium awards and contests.

Sale promotions often come in the form of discounts. Discounts impact the way consumers think and behave when shopping. The type of savings and its location can affect the way consumers view a product and affect their purchase decisions. The two most common discounts are price discounts ("on sale items") and bonus packs ("bulk items"). Price discounts are the reduction of an original sale by a certain percentage while bonus packs are deals in which the consumer receives more for the original price. Many companies present different forms of discounts in advertisements, hoping to convince consumers to buy their products.

Definition

Sales promotion represents a variety of techniques used to stimulate the purchase of a product or brand. Sales promotion has a tactical, rather than strategic role in marketing communications and brand strategy, it is also a form of advertisement used within a short period of time. Researchers Farhangmehr and Brito reviewed the definitions of sales promotions in marketing texts and journals and identified a set of common characteristics of sales promotion, including:

  • Short-term effects and duration;
  • Operates and influences only the last phase of the purchase process;
  • Exhibits a secondary role in relation to other forms of marketing communication;
  • Performs an accessory role regarding the product's core benefits
  • Is not a single technique, rather it is a set of techniques used for a specific purpose
Cokecaps is a manufacturer-sponsored sales promotion targeted at consumers.

Both manufacturers and retailers make extensive use of sales promotions. Retailer-sponsored sales promotions are directed at consumers. Manufacturers use two types of sales promotion, namely:

1. Consumer sales promotions: Sales promotions targeted at consumers or end-users and designed to stimulate the actual purchase
2. Trade promotions: Sales promotions targeted at trade, especially retailers, designed to increase sales to retailers, to carry the product or brand or to support the retailer in consumer-oriented promotions

Sales promotion is useful when:

1. The product is newly introduced.
2. There is excess inventory.
3. Penetration or entry into a competitors stronghold.
4. The product are likely to be perished if not sold or used.

The effect of sales promotion may not persist unless other marketing is used to create brand loyalty.

Types

Consumer sales promotions are short-term techniques designed to achieve short-term objectives, such as to stimulate a purchase, encourage store traffic or simply to build excitement for a product or brand. Traditional sales promotions techniques include:

  • Price deal: A temporary reduction in the price, such as 50% off.
  • Loyal Reward Program: Consumers collect points, miles, or credits for purchases and redeem them for rewards.
  • Cents-off deal: Offers a brand at a lower price. The price reduction may be a percentage marked on the package.
  • Price-pack/Bonus packs deal: The packaging offers a consumer a certain percentage more of the product for the same price (for example, 25 percent extra). This is another type of deal "in which customers are offered more of the product for the same price". For example, a sales company may offer their consumers a bonus pack in which they can receive two products for the price of one. In these scenarios, this bonus pack is framed as a gain because buyers believe that they are obtaining a free product. The purchase of a bonus pack, however, is not always beneficial for the consumer. Sometimes consumers will end up spending money on an item they would not normally buy had it not been in a bonus pack. As a result, items bought in a bonus pack are often wasted and is viewed as a "loss" for the consumer.
  • Coupons: Coupons have become a standard mechanism for sales promotions.
  • Loss leader: The price of a popular product is temporarily reduced below cost in order to stimulate other profitable sales
  • Free-standing insert (FSI): A coupon booklet is inserted into the local newspaper for delivery.
  • Checkout dispensers: On checkout, the customer is given a coupon based on products purchased.
  • Mobile couponing: Coupons are available on a mobile phone. Consumers show the offer on a mobile phone to a salesperson for redemption.
  • Online interactive promotion game: Consumers play an interactive game associated with the promoted product.
  • Rebates: Consumers are offered a money-back if the receipt and barcode are mailed to the producer.
  • Contests/sweepstakes/games: The consumer is automatically entered into the event by purchasing the product.
  • Point-of-sale displays:
    • Aisle interrupter: A sign that juts into the aisle from the shelf.
    • Dangler: A sign that sways when a consumer walks by it.
    • Dump bin: A bin full of products dumped inside.
    • Bidding portals: Getting prospects
    • Glorifier: A small stage that elevates a product above other products.
    • Wobbler: A sign that jiggles.
    • Lipstick Board: A board on which messages are written in crayon.
    • Necker: A coupon placed on the 'neck' of a bottle.
    • YES unit: "Your extra salesperson" is a pull-out fact sheet.
    • Electroluminescent: Solar-powered, animated light in motion.
  • Kids eat free specials: Offers a discount on the total dining bill by offering 1 free kids meal with each regular meal purchased.
  • Sampling: Consumers get one sample for free, after their trial and then could decide whether to buy or not.

New technologies have provided a range of new opportunities for sales promotions. Loyalty cards, personal shopping assistants, electronic shelf labels, and electronic advertising displays allow for more personalized communications and more targeted information at the point of purchase. For example, shoppers may receive alerts for special offers when they approach a product in a specific aisle.

Online deals vs. In-store deals

There are different types of discounts available online versus in the stores. On-shelf couponing: Coupons are present at the shelf where the product is available. On-line couponing: Coupons are available online. Consumers print them out and take them to the store. Although discounts can be found online and in stores, there is a different thought process when shopping in each location. For example, "online shoppers are more price-sensitive because of the readily available low search cost and direct price comparisons". Consumers can easily go to other websites and find better deals as opposed to physically going to various stores. In addition, buyers tend to refrain from purchasing bonus packs online because of the skepticism (of fraud and scams) that may come with the deal. Since "...bonus packs are more difficult than price discounts to process online, they are more difficult and effortful for the consumer to understand". For example, a buy-one-get-one-free deal on a website requires more work than the same bonus pack offered in a store. Online, consumers have to deal with payment processing, shipping and handling fees, and days waiting for the products' arrival, while in a store, the products are available without those additional steps and delays.

Trade promotion techniques

  • Trade allowances: Short-term incentive offered to induce a retailer to stock up on a product.
  • Dealer loader: An incentive given to induce a retailer to purchase and display a product.
  • Trade contest: A contest to reward retailers that sell the most product.
  • Point-of-purchase displays: Used to create the urge of "impulse" buying and selling your product on the spot.
  • Training programs: Dealer employees are trained in selling the product.
  • Push money: Also known as "spiffs." An extra commission paid to retail employees to push products.
  • Trade discounts (also called functional discounts): These are payments to distribution channel members for performing some function.

Consumer thought process

Meaningful savings: gain or loss

Many discounts are designed to give consumers the perception of saving money when buying products, but not all discounted prices are viewed as favorable to buyers. Therefore, before making a purchase, consumers may weigh their options as either a gain or a loss to avoid the risk of losing money on a purchase. A "gain" view on a purchase results in chance taking For example, if there is a buy-one-get-one-half-off discount that seems profitable, a shopper will buy the product. On the other hand, a "loss" viewpoint results in consumer aversion to taking any chances. For instance, consumers will pass on a buy-three-get-one-half-off discount if they believe they are not benefitting from the deal. Specifically, consumers will consider their options because "...the sensation of loss is 2.5 times greater than the sensation of gain for the same value".

Impulse buying

Impulse buying results from consumers' failure to weigh their options before buying a product. Impulse buying is "any purchase that a shopper makes that has not been planned... sudden and immediate". For example, if a consumer has no intention of buying a product before entering a store, but purchases an item without any forethought, that was impulse buying. Product manufactures want to promote and encourage this instant purchase impulse in consumers. Buyers can be very quick to make purchases without thinking about the consequences when a product is perceived to be a good deal. Therefore, sales companies "increasingly implement promotional campaigns that will be effective in triggering consumer impulse buying behavior" to increase sales and profits

Comparing prices

Many consumers read left-to-right, and therefore, compare prices in the same manner. For example, if the price of a product is $93 and the sales price is $79, people will initially compare the left digits first (9 and 7) and notice the two digit difference. However, because of this habitual behavior, "consumers may perceive the ($14) difference between $93 and $79 as greater than the ($14) difference between $89 and $75". As a result, consumers often mistakenly believe they are receiving a better deal with the first set of prices based on the left digits solely.

Right digit effect

The right digit effect focuses on the right digits of prices when the left digits are the same. In other words, prices like $45 and $42 force consumers to pay more attention to the right digits (the 2 and 5) to determine the discount received. This effect also "implies that consumers will perceive larger discounts for prices with small right digit endings, than for large right digit endings. For example, in a $32-to-$31 price reduction, consumers will believe to have received a greater deal than a $39-to-$38 price reduction. As a result, companies may use discounts with smaller right digits to mislead consumers into thinking they are receiving a better deal and increasing profit. However, consumers also are deceived by the infamous 9-ending prices. "The right digit effect relates to consumers' tendency to identify 9-ending prices as sale (rather than regular) prices or to associate them with a discount.

Framing effect

The Framing effect is "the phenomenon that occurs when there is a change in an individual's preference between two or more alternatives caused by the way the problem is presented". In other words, the format in which something is presented will affect a person's viewpoint. This theory consists of three subcategories: risky choice framing, attribute framing and goal framing. Risky choice framing references back to the gain-or-loss thought processes of consumers. Consumers will take chances if the circumstance is profitable for them and avoid chance-taking if it is not. Attribute framing deals with one key phrase or feature of a price discount that is emphasized to inspire consumer shopping. For example, the terms "free" and "better" are used commonly to lure in shoppers to buy a product. Goal framing places pressure on buyers to act hastily or face the consequences of missing out on a definite price reduction. A "limited time only" (LTO) deal, for example, attempts to motivate buyers to make a purchase quickly, or buy on impulse, before the time runs out.

Outside forces

Although there are aspects that can determine a consumer's shopping behavior, there are many outside factors that can influence the shoppers' decision in making a purchase. For example, even though a product's price is discounted, the quality of that product may dissuade the consumer from buying the item. If the product has poor customer reviews or has a short "life span," shoppers will view that purchase as a loss and avoid taking a chance on it. A product can also be viewed negatively because of consumers' past experiences and expectations. For example, if the size of a product is misleading, buyers will not want to buy it. An item advertised as "huge," but is only one inch tall, will ward off consumers. Also, "the effects of personal characteristics, such as consumers' gender, subjective norms, and impulsivity" can also affect a consumer's purchase intentions. For example, a female will, generally, purchase a cosmetic product more often than a male. In addition, "some...shoppers may be unable to buy ...because of financial constraints".

Regulation

Sales promotions have traditionally been heavily regulated in many advanced industrial nations, with the notable exception of the United States. For example, the United Kingdom formerly operated under a resale price maintenance regime in which manufacturers could legally dictate the minimum resale price for virtually all goods; this practice was abolished in 1964.

Most European countries also have controls on the scheduling and permissible types of sales promotions, as they are regarded in those countries as bordering upon unfair business practices. Germany is notorious for having the most strict regulations. Famous examples include the car wash that was barred from giving free car washes to regular customers and a baker who could not give a free cloth bag to customers who bought more than 10 rolls.

See also

References

  1. Taylor, John (1978). How to start and succeed in a business of your own. p. 290.
  2. ^ Yin, Xu; Jin-Song, Huang (2014). "Effects Of Price Discounts And Bonus Packs On Online Impulse Buying". Social Behavior & Personality. 42 (8): 1293–1302. doi:10.2224/sbp.2014.42.8.1293.
  3. Farhangmehr M. and Brito P.Q.. "Sales Promotions: Prescriptive Definitions and the Managers View,". In: Sidin S., Manrai A. (eds), Proceedings of the 1997 World Marketing Congress. Developments in Marketing Science: Proceedings of the Academy of Marketing Science, Springer, Cham, 2015, pp 45-49
  4. ^ Gedenek, K., Geslin, S.A. and Ailawadi, S.L., "Sales Promotion," in: Krafft, M. and Mantra, M.K. (eds), Retailing in the 21st Century: Current and Future Trends, pp.345-359
  5. ^ Isabella, Giuliana (2012). "Influence Of Discount Price Announcements On Consumer's Behavior" (PDF). Revista de Administração de Empresas. 52 (6): 657–671. doi:10.1590/s0034-75902012000600007.
  6. ^ Coulter, Keith; Coulter, Robin (2007). "Distortion Of Price Discount Perceptions: The Right Digit Effect" (PDF). Journal of Consumer Research. 34 (2): 162–173. doi:10.1086/518526. S2CID 43734022. Archived from the original (PDF) on 2019-02-17.
  7. ^ McKechnie, Sally (2012). "Effects Of Discount Framing In Comparative Price Advertising" (PDF). European Journal of Marketing. 46 (11/12): 1501–1522. doi:10.1108/03090561211259952.
  8. Stuart Mitchell, "Resale price maintenance and the character of resistance in the conservative party: 1949-64," Canadian Journal of History 40, no. 2 (August 2005): 259-289.
  9. Anonymous (May 13, 2000). "Handcuffs on the high street". The Economist.
Media manipulation
Context
Activism
Advertising
Hoaxing
Marketing
News media
Political campaigning
Propaganda
Psychological warfare
Public relations
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