Types of Sales Promotions
In order to understand how effective sales promotion is in influencing consumer purchase decisions, one has to take a closer look at marketing and consumer behavior theories. This article will focus on critically analyzing the relevant concepts and theories relating to sales promotion and the consumer purchase decision. The selected path will cover a wide range of topics, from the broader concepts of marketing communications mix to the more specific concepts of sales promotions and the consumer purchasing process.
Promotion: Burnett (1993) defines promotion as the marketing function concerned with persuasively communicating to target audience the components of the marketing program in order to facilitate exchange between the marketer and the consumer and to help satisfy the objectives of both.
Sales promotion is a part of the communication or the promotion mix. Sales promotion can be defined as short-term incentives to encourage purchase of a good or service (Kitchen 1999). Sales promotion consists of marketing activities that add to the basic value of the product or service for a limited time and directly stimulate consumer purchasing (for example, coupons and product sampling), stimulate the distributors to carry the product and/or promote the product (for example, trade deals and spiffs), or stimulate the effort of the sales force (for example, contests and meetings) (Burnett 1993).
The differences between sales promotion and the other components of the promotion mix are important in understanding both the basic role of sales promotion and how to use it effectively.
Sales promotions can broadly be classified into three categories depending on the initiator and the target of the promotion.
- Consumer Promotions (premiums, gifts, prizes, competitions, etc.)
- Trade Promotions (Special terms, point-of-sale materials, etc.)
- Sales Force Promotions (Incentive and motivation schemes, etc.)
Consumer Sales Promotions: Clow and Baack (2002) define consumer sales promotions as the incentives aimed at the firm’s customers. These customers are the end users of the product and do not resell to another business. The various types of consumer sales promotions are as follows:
- Contests and Sweepstakes
- Refunds and Rebates
- Bonus Packs
Coupons: A coupon is a price reduction offer to a consumer. It may be a percentage off the retail price such as 25 percent or 40 percent, or an absolute amount.
Premiums: Premiums are prizes, gifts, or other special offers that consumers receive when purchasing products. When a company offers a premium, the consumer pays full price for the product or service, in contrast to coupons, which are price reductions.
Contests and Sweepstakes: Contests normally require the participant to perform some type of activity. The winner is selected based on who performs best or provides the most correct answers. Often, contests require the participants to make a purchase to enter, whereas no purchase can be required to enter a sweepstakes. Consumers may enter as many times as they wish. It is permissible for firms to restrict customers to one entry per visit to the store or some other location. The chances of winning sweepstakes are on a probability factor.