Definition: Sales promotion - Sales promotions are short-term incentives to encourage the purchase or sale of a product or service. Sales promotion includes several communications activities that attempt to provide added value or incentives to consumers, wholesalers, retailers, or other organizational customers to stimulate immediate sales. These efforts can attempt to stimulate product interest, trial, or purchase.
An interesting article appeared recently in the Boston Globe that talked about the aftermath of the "cash for clunkers" program that saw our U.S. government offering up to $4,500 as an incentive for people to trade in their old clunker automobiles for newer, more fuel efficient vehicles. After spending nearly $3 billion on the program, what lasting effect is it having on U.S. auto sellers? Nil. Nada. None. The recession is back in full force at auto dealers across the country.
Sales promotions are by definition short-term programs. Their aim is to spur purchase of your product or service.
Before you run your next sales promotion try to answer a few questions first.
1) If the promotion works and it increases sales in the short-term, will that have any negative effect on long-term sales?
2) Will I simply be moving the purchase time frame for somebody who would have purchased from me anyway?
3) Will I be conditioning my customers to wait for an incentive or discount next time such that they will forever more be less likely to pay full price?
4) Is my brand suited to sales promotion which in one way or another is really a discount?
5) Will I be damaging my brand in the long-run?
See also:
http://www.getelastic.com/how-much-is-your-coupon-code-box-costing-you
http://mktsci.journal.informs.org/cgi/content/abstract/13/1/23
http://books.google.com/books?id=o_mIiLQrNnsC&pg=PA8&lpg=PA8&dq=sales+promotion+brand+value&source=bl&ots=rdH8FlIEXA&sig=tqAzicEKHpqibqKJLIbz3_ukMzE&hl=en&ei=eza4SrD9NsbllAfC9OzJDg&sa=X&oi=book_result&ct=result&resnum=8#v=onepage&q=sales%20promotion%20brand%20value&f=false
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