The importance of sales promotion is the unique role it plays in the marketing mix. In particular, it enables the marketer to add time urgency and other behavioral influences to the promotion campaign. Along with advertising, public relations and personal selling, sales promotion is one of four key tools for marketing communication.
While advertising is primarily used to build a product's visibility and favorability over time, sales promotion is a means of giving buyers incentive to make an immediate purchase or to switch from a competitive brand. For example, a consumer might have a positive image of a brand based on a pleasing television commercial, but feel no urgency to try it until receiving a discount coupon or a sweepstakes opportunity.
Sales promotion is most effective when it is tailored to the buying behavior of a particular target. Among the most relevant behavioral dimensions are purchase frequency and brand loyalty. For example, people who buy spices rarely, or in small quantities, decide to buy more often or in larger volume if they received free recipes in return. Those who usually choose a competitor's brand of spice could be induced to switch by a discount coupon.
Many popular sales promotions are targeted primarily or solely to household consumers. Those focused on price include both discount coupons and the significant but time-limited price breaks known as deals, like buy-one-get-one-free offers. Contests and sweepstakes are another approach intended to create interest and excitement tied to a brand. Loyalty programs, heavily used by airlines and hotels, reward patrons with some premium or gift that becomes more valuable as their purchases increase in frequency or volume.
Trade sales promotion is aimed at a market that buys for resale, not for personal consumption. Primarily, this group includes retail and wholesale buyers who control distribution to household consumers. Certain types of consumer promotion can influence the trade, but marketers also use devices specifically designed for this audience. Some common trade promotions include discounts or rebates offered in return for large orders, rewards of cash or merchandise to high-performing salespeople, and exhibits at trade shows.