Effect of Sales Promotion on Brands

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Sales promotions are an important part of a brand's marketing mix. A good sales promotion will build brand equity by reinforcing a brand's marketplace position, and possibly lead to a temporary or permanent lift in sales. If a sales promotion does not adhere to the brand standards or appears gimmicky, it can hurt the brand in the long run.

Types of Sales Promotions

Sales promotions are usually given the largest percentage of a company's marketing budget because they produce results that occur quickly and are measurable.

Examples of consumer-focused sales promotions include rebates, coupons, discount pricing, buy-one-get-one-free (BOGO) sales, free samples and contests. These are usually accompanied by advertising in the form of signage, print ads or point-of-purchase (POP) displays.

The purpose of a sales promotion can vary. An effective sales promotion can boost sales, build consumer awareness of a new brand, attract new customers to an established brand or reduce excess inventory.

Beneficial Effects

The right sales promotion, especially one that is not price-based, can be a very effective tool in getting a new brand quick consumer awareness or targeting a new consumer demographic.

Premium-based promotions tend to see longer post-promotional benefits than price-based promotions. These promotions can be in the form of a relevant giveaway with purchase, such as a hairbrush with a hair dryer, or through the use of coupons.

Sales promotions that are targeted toward a certain audience tend to have much better and positive results than promotions thrown out to the entire consumer base. For instance, a sales promotion for a minivan that is targeted at women with children should give you fairly good results.

Harmful Effects

If your brand is perceived by consumers as being a value rather than premium brand, it is more likely to receive the most benefit from a price-based sales promotion. However, overuse of price-based sales promotions for any brand can have devastating effects on the brand's image and perceived quality. This is particularly true for premium and super-premium brands or products and services in which the consumer has difficulty judging product quality in other ways, such as legal services or vitamins.

A recent study by Babson University showed that deep discounts, specifically 20 percent or greater, can hurt a brand more than lower discounts in the long-term. The same holds true for unannounced price reductions in the form of temporary price discounting on everyday retail prices.

Most sales promotions are oriented toward short-term gain rather than long-term brand reputation, which is a problem in and of itself as true brand marketing is geared toward the long-term health of a brand.

Brands with a small competitive category, such as camera film, tend to benefit less from sales promotions than large categories such as breakfast cereal.

Measurement and ROI

The results of sales promotions are measurable, and it is a relatively easy job to calculate your return on investment (ROI). How you measure the success of a sales promotion will depend on the promotion's goal.

If you were trying to drive sales or reduce inventory levels, measuring success is simple math. If the goal was to build a brand's image or raise consumer awareness, you will need to conduct post-promotion surveys.

Promotions designed to build customer loyalty can be measured through following repeat purchase patterns of your target consumers.

10 Steps to a Successful Sales Promotion

  1. Understand your brand's current brand image, value and reputation.

  2. Understand your brand's long-term strategies and adhere to them.

  3. Know your current consumers and target audience.

  4. Recognize the capabilities of your sales force.

  5. Understand the relationship your brand has with your wholesalers and retailers.

  6. Research the results of past sales promotions.

  7. Have a clearly defined objective for the promotion.

  8. Make sure there is a benefit to the consumer.

  9. Stay within your budget.

  10. Be creative.

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