Advantages and Disadvantages of Sales Promotion

We are all guilty of excessive shopping indulgences sometimes. And who can blame us when that sweater came with such a good deal? Sure, it’s the dead of summer right now but it’s a smart purchase for the coming months, we assure ourselves. It is certainly hard for people to pass up a good “bargain”. And this is exactly what companies thrive on by doing sales promotion. So let us explore the workings of sales promotion and if it is beneficial as a concept or not.

WHAT IS IT EXACTLY?

The Cambridge Dictionary defines a sales promotion as an activity or series of activities done to increase sales of a particular product. For example by reducing its price or advertising it. 

Let’s simplify this. Sales promotion essentially is a marketing technique. And the goal is to make the consumer act immediately and, let’s go to the extent of saying, impulsively. Because at the end of the day, the company wants to make immediate profits and boost their sales. Therefore, various sales promotional activities are devised. These include coupons, prizes, discounts, contests, rebates, loss leaders, etc.

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TYPES OF SALES PROMOTION

Advantages and Disadvantages of Sales Promotion

Sales promotion is either directed at the consumers, staff, or the retailers (traders). So there are two main types of sales promotion – consumer sales promotion and trade sales promotion.

Consumer sales promotion or consumer schemes are, as the name suggests, aimed at the final consumer. These include price deals, coupons, discount codes, checkout dispensers (based on what purchases were made), reward programs, etc. Meanwhile, trade sales promotions are targeted to entice traders and retailers (wholesalers). So, they are usually bulk offers. For instance, trade discounts, contests, trade allowances, bulk discounts are examples of trade sales promos. 

ADVANTAGES OF SALES PROMOTION

Better Sales

One of the biggest aims and advantages of sales promotion is that it helps boost the sales of a company. During the sale promotional period, there is always an increase in the level of sales. This is because everyone loves to buy things for cheaper. So you have contests, coupons, massive discounts, loyalty programs, and other kinds of sales promos to increase the selling of the said products or services. 

A 2019 survey shows that out of the people that took the survey, 92 percent of people in the United States had used coupons for shopping. This shows that the sale promos are working and consumers are taking advantage of the same.

Value for Money for Consumers

As mentioned above, sales promotion tries to capture the customers’ attention with great deals. And this is beneficial to the customers because cheap prices means more affordability. It gives them an incentive to purchase more. Season sales, holiday discounts, and buy one get free offers (BOGOs) are every customer’s best friend, especially a frugal one. Hence, promos are a classic example of giving the consumers their money’s worth.

In addition, this benefits companies and businesses because more customers means an increase in potential loyal customers. And if their product or service is of quality then their popularity only increases.

Helps Sell Excess Items

Oftentimes, companies may end up with extra products. Items that are nearing their shelf -life also have to be taken care of. So instead of throwing them out, many companies just offer sales promotions as ‘end of the season sales’ and give away excess items at throwaway prices. Though they do not end up making a lot of profits through this, this does help clear out excess inventory and meet their expenses.

New Businesses

Sales promotion helps new businesses to establish themselves. Having a good business does not just mean having quality products and services. It is equally important to market your brand effectively. The aim always is that customers should feel like they can believe in your brand. So attractive offers and discounts help in gathering new and prospective customers. In addition, your sales, as well as your popularity, will only increase.

Technology

Technological advancements have helped further an increase in sales promotions. For instance, many companies offer digital loyalty cards, electronic media, and electronic shopping assistants to their loyal and returning customers. These offers give out great deals and the ease of use further impacts how companies use sales promotions for profits. 

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DISADVANTAGES OF SALES PROMOTION

Limited

The main basis on which sales promotions work is that it will be implemented for a limited period of time. Hence, the increase in sales is only for a limited period of time which can negatively affect the future of these companies and organizations. It is very difficult to maintain the limited momentum that sales promotions create for the company. Because at the end of the day, these sales are announced for a fixed period – the customers and retailers avail these offers and that’s the end of it. In addition to this, if there are continuous and repeated sales promotions throughout the year, then there are chances of diluting the customers’ interest in the products or services. 

No Long-term Benefits

Sales promotion does nothing for long-term benefits. And in fact, it could create negative implications for the companies. These promotions require the selling of a large number of goods for smaller profit margins. So fiscally though it helps boosting sales, it definitely limits your revenue on the whole. Moreover, there are no sure guarantees that these sales promotion will yield the benefits that are anticipated. The promise of prospective customers is also entirely on assumption. Many consumers exclusively wait and shop only during sale seasons. This equals to losses for companies. So, it is a risk that may not pay off at all. This is a huge gamble especially for businesses that are just starting out.

Advantages and Disadvantages of Sales Promotion

Misleads Consumers

There are easy chances for customers to get mislead with the promises made through the sales promotions. The marketing strategy of every business is to capture the attention of the audience with big rewards and promises. But what they do not tell you is that there is always something hidden in the fine print. Many of these sales and discounts are actually not what they seem. Moreover, with lucrative deals and promises, customers may have a hard time paying full price for the same products and services. This is because they have been conditioned into buying things that are apparently much cheaper (though it is only a marketing strategy).

Incidents of Violence

There have been several incidences where violence and chaos has ensued at shopping malls and centers due to sales promotions. A very good example is the annual Black Friday sales that occur in the United States. Every year these sales offer massive discounts and offers to consumers and there is a frenzy everywhere. This has led to scuffles and fights and in some cases, even death. 

To sum up, the pros and cons of sales promotions are varied. Companies and consumers, both can equally benefit from sales with careful considerations. Above all, one must always strive to be responsible consumers and avoid mindless purchases. 

Pros and Cons

PROS

CONS

Better Sales

Limited

Value for Money for Consumers

No Long-term Benefits

Helps Sell Excess Items

Misleads Consumers

New Businesses

Incidents of Violence

Technology