Benefits of Sales Promotions

Sales promotion is an Integrated Marketing Communication strategy that is said to produce several benefits to the business.

Sales promotions produce very pronounced effects to businesses. It is undeniable that sales promotions offer manufacturers a series of benefits which other forms of marketing communications cannot duplicate.

Increase in Profit Levels

Sales promotions enable companies to stand out in a competitive retail environment. This is done by creating on-shelf differentiation between their products and those of their competitors. Real product differentiation is quite hazy these days due to the convergence of technology.

Since the appeal of retailer products is to a huge extent determined by price, sales promotions enable companies to adjust the retail price of the product for short periods of time and with minimal price difference.

Sales promotions aim to increase sales in the short-term. Mass-production techniques are now usual in the business environment. This causes an increase of competition for market share. Sales promotion techniques enable increases in sales volume while at the same time improving the market share of the company. For manufacturers, it could also help in the using excess manufacturing capacity by creating more products.

Influence Trade and Customer Behavior

Price promotions, one of the functions of sales promotions, allow companies to change prices depending on supply and demand forces without changing permanent list prices. These changes in price enable companies to influence trade and customer behavior.

This is because price promotions enable companies to come up with strategies that would increase sales during the lean season. Price reductions during slow sales enable companies to attract more consumers to buy their products.

For instance, when foot and mouth disease became a problem, consumers refrained from buying pork products. As a way to attract more buyers to their products, companies reduced their prices to almost half of the original. Within days, sales had recovered.

Since original prices are often priced high in order to cope with sudden fluctuations in the market such as price controls, to offset rapid increases in commodity prices and to determine sustainable price levels, reducing prices then would not affect profits severely.

Sales promotion costs depend to a large extent on volume. Small businesses are able to compete against bigger brands by using smaller budgeted on-shelf sales promotional activity.

New products that are intended for smaller markets would also benefit from sales promotion activities instead of spending on large-scale advertising. This is particularly applicable in markets where the product idea is quite familiar to potential buyers, a store-based sales promotion may be all that is necessary to introduce the said product.

Retailers could also make use of this strategy. Encouraging consumers to try new products and discounting retail inventories of obsolete products, price promotions effectively lessen the retailer’s risks.

Sales promotions enable consumers to try out different products thereby creating more consumer choice. On-shelf differentiation of any product category becomes more diverse due to the different sales promotional techniques. Since different items are on promotion every week, consumer choice is increased in the process and there will be more options to buy more products.

Short-term sales promotional activity may reduce out-of-stock problems since retail can increase purchases due to an increase in sales. Sales promotions also enable the trade to offer temporary displays of the products, price cuts and/or free advertising, which could result in more sales. These activities could help customers take notice of otherwise unnecessary products.

Sales promotions could increase demand of the product by encouraging consumers to try out new products that are being advertised. Advertising and promotions together would create the maximum impact to the desired target market.

Providing good, irresistible deals to consumers will force them to make short-term decisions. The consumers usually based their decisions on the price of the product therefore with reduced prices, consumers might just be forced to make purchases even if they did not originally intend to do so.