Sales promotions are of two broad types; consumer promotions such as coupons, sampling, premiums, sweepstakes, low-cost financing deals, and rebates; and trade promotions such as slotting allowances, allowances for featuring the product in retail advertising, display and merchandising allowances, and the like. They are used to get consumers to try or to repurchase the brand and to get the retail trade to carry and to “push” the brand. Additionally promotions are also used by manufacturers to “discriminate” between different segments of consumers – for example only those consumers who have the time to clip coupons will clip and use them and obtain a lower price for themselves, while those consumers who are time-pressed wont use coupons (and will end up paying a higher price). Finally, retailers use promotions to clear their inventory of slow-moving, out-of-session, or shelf-unstable products (those products, such as fresh produce, that will spoil if they are not sold quickly). Retailers thus run their own promotions aimed at consumers, such as price cuts, displays, frequent shopper programs, and so on.
Sales promotions are a key element in including trial or repurchase in many communications programs in which advertising creates awareness and favorable attitudes but fails to spur action. One of the reason they spur action – compared to simple price cuts – is that they are typically run for a limited duration, which means that the consumer must act quickly, before the promotion ends. Other reasons they spur action is simply that many consumers feel that they get value for their money if they buy “a good deal”. In fact many consumers automatically assume that if a brand is being promoted it must be a good deal. By one estimate, 80 % of US house-holds use coupons, 75 % of the appliances bought in the US are bought on deal, and 70 % of the packaged goods sold to retailers are sold with a trade promotion. Thus it is feasible to understand the complementary role of sales promotions in order to conduct situation analysis properly and to set communications, advertising, and sales promotion goals. Second, according to a 1993 survey of promotional practices in 79 leading companies, sales promotions constitute of about 73 % of marketing expenditures, whereas advertising constitutes of about 27 %. The shares of the marketing dollar spend on trade promotions have raised rapidly in recent years, in large part due to the growing power of ever-larger retain chains.
Sales promotions, along with other components of marketing operate together in creating impact on the consumer. When designed and run in tandem, these yield powerful synergies that magnify their individual effects. For example a coupon offer in a Sunday newspaper free standing insert can have a higher redemption rate if theme ads for that brand are run concurrently.