The theories of Sales Promotion

Introduction

Sales promotion comprises a range of tactical marketing techniques designed within a strategic
marketing framework to add value to a product or service in order to achieve specific sales and
marketing objective.

Sales promotion is a technique which has significant potential to improve short term sales and
like direct response work; its effectiveness can be tightly measured. Although its strategic value
is the subject of considerable debate, nevertheless, it is an important tool of marketing. There are
few markets or products where it cannot be used and few brands to which it cannot be applied.

Types of sales promotion:

(i)Consumer oriented sales promotions:

Targeted to the ultimate users of a product or service. Coupons, sampling, premiums, rebates,
contests, sweepstakes, and POP materials are induced the sales

(ii)Trade oriented sales promotions:

Targeted toward marketing intermediaries such as retailers, wholesalers, or distributors.

Promotion allowances, merchandise allowances, price deals, sales contest and trade shows.

Sales promotion methodology

The traditional business world suggests that there are three different types of sales promotion
techniques: the push, the pull, and the combination.

(i) The push theory of sales promotion techniques supports that you promote your
goods to a retailer, who will then pass the wares along to their consumers.

A push promotional strategy makes use of a company's sales force and trade promotion
activities to create consumer demand for a product. The producer promotes the product to
wholesalers, the wholesalers promote it to retailers, and the retailers promote it to consumers. A
good example of "push" selling is mobile phones, where the major handset manufacturers such
as Nokia promote their products via retailers such as Carphone Warehouse. Personal selling and
trade promotions are often the most effective promotional tools for companies such as Nokia -
for example offering subsidies on the handsets to encourage retailers to sell higher volumes. A
"push" strategy tries to sell directly to the consumer, bypassing other distribution channels (e.g.
selling insurance or holidays directly). With this type of strategy, consumer promotions and
advertising are the most likely promotional tools.

(ii) The pull theory varies by focusing on the consumer himself. Go directly to the
source to introduce your goods, and encourage a direct purchase.

A pull selling strategy is one that requires high spending on advertising and consumer
promotion to build up consumer demand for a product. If the strategy is successful, consumers
will ask their retailers for the product, the retailers will ask the wholesalers, and the wholesalers
will ask the producers. A good example of a pull is the heavy advertising and promotion of
children's toys mainly on television. Consider the recent BBC promotional campaign for its
new pre-school programme the Fimbles. Aimed at two to four-year-olds, 130 episodes of
Fimbles have been made and are featured everyday on digital children's channel CBeebies and
BBC2.As part of the promotional campaign, the BBC has agreed a deal with toy maker Fisher-
Price to market products based on the show, which it hopes will emulate the popularity of the
Tweenies. Under the terms of the deal, Fisher-Price will develop, manufacture and distribute a
range of Fimbles products including soft, plastic and electronic learning toys for the UK and
Ireland.

(iii) The combination theory is a slight part of both. You may supply a retailer with your
consumable. He or she will then offer this to a customer with incentives for shopping
with them.

This strategy is usually used if the distributor is hesitant to carry a product, since it gets its
required consumers without having to go to retail outlets. Car dealers often provide a good
example of a combination strategy. If you pay attention to car dealers advertising, you will often
hear them speak of cash-back offers and dealer incentives.
Because sales promotion is an initiative carried out by an organization to promote a product to
ensure increase in sales so it has varied methods of promotion. Most of the time, sales
promotions are creative and original therefore providing a comprehensive list of all methods is
not possible, however some examples of the regularly used sales promotions activities are as
follows:
Buy-One-Get-One-Free
New Media
Merchandising
CRM (customer relationship management)
Free gifts
Discounted prices
Free samples
Vouchers & coupons
Joint promotions
Competitions and prize draws/Cause-related or fair
Finance deals
Sales promotion is directed at sales staff, customers and distribution channel members which
may include wholesalers, retailers etc. When targeted at consumers it is called consumer sales
promotion, when it is targeted at wholesalers and retailers it is called trade sales promotions.
However by many it is considered as gimmick because of the unusual methods some marketers
use for sales promotion.

All of these sales promotion strategies can be victorious. Your business may choose to use one or
all of them when trading your products. When working to implement your technique, you may
also want to utilize some other methods. Allow people to try samples of your goods. Engage the
free advertising of in-store demonstrations and exhibitions. All of these can be wonderful sales
advancement strategies for your business.

Sales Promotion Theory

Sales promotion is giving the customer something extra, rewarding them for their behavior on
this particular purchasing occasion. There are several theories which support the concept of
reward as a motivator. The conditions of sales promotion are classical and operant conditioning.
Whereas classical conditioning is largely associated with advertising operant conditioning is seen
as an explanation for consumer behaviour in relation to sales promotion. Operant conditioning
suggests the response of the individual is likely to be affected by positive reinforcement (reward)
or negative reinforcement (punishment), although the affect is likely to cease when these
reinforcements are taken away. Edward Thorndike suggested that the law of effect, which had
to do with positive and negative consequences of actions, is also relevant to sales promotion. The
law states that the consequences of behavior now will govern the consequences of that behavior
in the future. In other words once a buying pattern is achieved it will continue into the future.
John Watson, US psychologist and founding father of American behaviouralism, introduced the
concept of shaping, chaining, and priming.

Shaping:

John Watson states shaping suggests that a final response can be explained as appearing after
preceding acts which; taken together, constitute a chain of successive approximations. Shaping
breaks the desired behaviours in a series of stages and the parts are learnt in sequence.

Chaining:

Chaining suggests behavior emerges from sequences of actions in which the preceding action
becomes the discriminative stimulus for the final response (inducement > purchase).

Priming:

De Pelsmacker (2001) states, priming suggests that a short exposure to a particular stimulus can
evoke an increased drive to consume more of a product. So this all theories offer reasons why we
can motivate people to buy more by offering incentives although the continuation of these
behaviuor is open to doubt.

Uses of sales promotion:

a) Introduce new products

b) Get existing customers to buy more

c) Attract new customers

d) Combat competition

e) Maintain sales in off season

f) Increase retail inventories

g) Tie in advertising & personal selling