Advantages and Disadvantages of Sales Promotion

Meaning of Sales Promotion

Sales promotion refers to a marketing strategy that aims at increasing sales by promoting goods among the public. It is a key component of the promotional mix which is used for introducing new products, attracting traffics, clearing out inventories, and lifting up sales temporarily. It includes all those activities that supplement and coordinate personal selling and advertising making them more effective towards attracting customers in order to buy a product. All the techniques used in sales promotion are indirect and non-personal in nature that are mainly related to the marketing of consumer goods rather than industrial goods. 

Sales promotion serves an important medium of supplying all relevant information to customers through appropriate product displays, packaging, exhibitions, demonstrations and wide publicity. It also uses limited time offers in terms of coupons, discounts and several other benefits for accelerating and maximizing the sales volume. In today’s modern times, sales promotion has become an important tool used by every business for inducing the people to buy brand products. Companies are spending lakh of rupees across the world just for sales promotion activities with a motive of increasing their customer base.

Advantages of Sales Promotion

  1. Introduce New Products: Sales promotion techniques are the most effective ways of introducing innovative products in the market by business organizations. Companies sometimes face difficulties in creating a market for new products. Sales promotion enables in attracting peoples towards these products using penetration price policy, discounts, coupons, and several other benefits. In this way, it induces clients to buy the brand products that lead to increase demands for newly developed products. 
  2. Generate New Leads: It generates a large number of leads for business by exposing more and more customers and other business partners to the products of the company. Sales promotion serves as a communication link between the producer and the customer. It supplies all important information about products to clients and resolves all their queries. Techniques of sales promotion aim at differentiating the products by explaining the benefits of the brand over others that is how it stands out from the crowd. This eventually enables in attracting high number of leads thereby increasing the customer base.
  3. Large Scale Production: Sales promotion facilitates an organization is enjoying economies of cost by carrying out large-scale production. It focuses on increasing the demand for the company’s products by doing a mass promotion in the market. An increase in sales volume will ultimately lead to reducing the per-unit cost to the company by doing mass production of products. 
  4. Immediate Returns: It offers more quick and immediate returns in comparison to other components of the promotion mix like advertising and personal selling. Sales promotion uses different methods for boosting the sales volume within a short period of time. Measures like free samples, discounts, coupons, providing free trials, giving product demonstrations etc. are helpful in attracting more customers for buying products thereby raising the overall sales volume.
  5. Strengthen Customer Involvement and loyalty: Another important benefit provided by sales promotion is that it keeps existing customers re-engaging with brand and builds loyalty among them. It is a mechanism used by organization that keeps on interacting with customers once they make purchases with brand or subscribe to its email’s newsletter. Sales promotion team keeps on sending promotional emails and messages to customers on a regular basis to keep them engaging which leads to developing a close connection with them. 
  6. Better Control: Sales promotion techniques provides effective control in the hands of management for regulating the promotional activities of organization. Programmes of sales promotion are more cost-efficient having lower promotional costs and provide quick and better returns. Managers can easily evaluate the results of each promotional programmes in relation to their cost factor.
  7. Improve Public Image of Firm: It has an effective role in building a strong image of firm in market. Sales promotion provides customers with all necessary information about products and resolves all their queries. Clients in presence of right information are able to choose right product by easily doing a comparison of brand products with other competitors in market. This results in better service experience of customers with their brined thereby building a strong position in market. 
Advantages and Disadvantages of Sales Promotion
Advantages and Disadvantages of Sales Promotion

Disadvantages of Sales promotion

  1. Increase Price Sensitivity: Sales promotion is disadvantageous for business organization if it is provided on a regular basis by organization. Customers may become too price-sensitive and wait for promotional deals to be announced by the company. They may not buy products from routine sales at the market and instead buy at discounted price which lowers the overall organizational profitability. 
  2. Costly: Sales promotion raises the expenses of business organization which have adverse impact on their profit margin. Techniques of sales promotion like free samples, discounts, and coupons require huge costs on the part of company. It is uncertain whether all these measures will provide equal returns that reduce the profitability of business. 
  3. Tarnish Brand Image: Sales promotion may also lower the perception of customers towards the brand in case it is overused by the organization. When products are offered continuously at discounted price by brand then the customers believe it as a regular price. They may doubt the product quality of the brand in comparison to other competitors providing products with no offers and price reductions. 
  4. Short-Term Orientation: Sales promotion is meant for short-term which boosts the sales volume for a shorter period by offering distinct offers and benefits to customers. Short-term sales volume is quite difficult to maintain and has a negative influence on the long-term future of business.