15.6 Main Types of Sales Promotion

Sales promotion is a crucial marketing tool that boosts short-term sales and brand awareness. It's split into consumer-oriented and trade-oriented strategies, each targeting different parts of the distribution chain. Consumer promotions like coupons and samples directly influence buyers, while trade promotions motivate retailers to push products.

These strategies work together to create a comprehensive sales promotion plan. Consumer promotions drive demand and encourage product trials, while trade promotions ensure products are well-stocked and prominently displayed in stores. Both types aim to increase sales, market share, and brand loyalty through various incentives and engagement tactics.

Consumer-Oriented and Trade-Oriented Sales Promotion

Consumer vs trade promotion techniques

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• Consumer-oriented sales promotion
  • Targets end consumers directly influences their purchasing decisions
  • Aims to stimulate immediate sales encourages product trial and brand switching
  • Examples include coupons (cents-off deals), samples (free trial sizes), contests (sweepstakes, giveaways), and rebates (money back offers)
• Trade-oriented sales promotion
  • Targets channel intermediaries such as wholesalers, distributors, and retailers
  • Focuses on motivating intermediaries to stock, promote, and sell products to their customers
  • Examples include trade allowances (discounts, incentives), cooperative advertising (shared ad costs), and dealer incentives (rewards, bonuses)

Consumer-oriented promotion strategies

• Coupons
  • Offer a discount on the product price for a limited time encourages purchase
  • Encourage trial of new products and repeat purchases of established brands
  • Can lead to stockpiling (buying in bulk) and brand switching (trying competitors)
• Samples
  • Provide a free trial of the product allows consumers to experience it firsthand
  • Help consumers evaluate the product reduces perceived risk of trying something new
  • Can lead to immediate sales if consumers like the product and long-term customer acquisition
• Contests and sweepstakes
  • Offer prizes or incentives for participation creates a sense of excitement and engagement
  • Generate buzz and brand awareness as consumers share and discuss the promotion
  • Can increase brand loyalty and customer retention as participants feel valued and rewarded
• Rebates
  • Provide a refund or cashback offer after the purchase is made encourages higher-priced purchases
  • Encourage larger purchases or bundling of products to maximize the rebate amount
  • Can stimulate sales without reducing the perceived value or prestige of the product
• Point-of-purchase displays
  • Attract attention and influence impulse buying decisions at the point of sale
  • Highlight product features, promotions, or new offerings to customers in-store

Trade promotion methods and impacts

• Trade allowances
  • Offer discounts, rebates, or incentives to retailers for stocking and promoting products
  • Help secure prime shelf space and improve product visibility in stores
  • Can lead to increased sales volume and market share as more retailers carry the product
• Cooperative advertising
  • Share advertising costs between the manufacturer and the retailer for local promotions
  • Provide support for retailers' advertising efforts and customized marketing materials
  • Can enhance the partnership and collaboration between the manufacturer and the retailer
• Dealer incentives
  • Offer rewards, bonuses, or perks for achieving sales targets or outperforming competitors
  • Motivate dealers and their sales teams to prioritize and recommend the manufacturer's products
  • Can lead to increased sales effort, product knowledge, and customer support at the point of sale
• Trade shows and exhibitions
  • Provide a platform to showcase products, demonstrate features, and interact with potential partners
  • Help establish new distribution channels and strengthen relationships with existing intermediaries
  • Can generate leads, facilitate negotiations, and drive business-to-business sales opportunities

Sales Promotion Strategies and Tactics

• Sales promotion
  • Short-term incentives to encourage purchase or sales of a product or service
• Push strategy
  • Focuses on promoting the product to intermediaries to "push" it through the distribution channel
• Pull strategy
  • Aims to create consumer demand to "pull" the product through the distribution channel
• Loyalty programs
  • Reward repeat customers to encourage continued patronage and increase customer lifetime value
• Price promotions
  • Temporary price reductions or special offers to stimulate sales and attract price-sensitive consumers