Definition: Sales promotions are the set of marketing activities undertaken to boost sales of the product or service.

Description: There are two basic types of sales promotions: trade and consumer sales promotions. The schemes, discounts, freebies, commissions and incentives given to the trade (retailers, wholesalers, distributors, C&Fs) to stock more, push more and hence sell more of a product come under trade promotion. These are aimed at enticing the trade to stock up more and hence reduce stock-outs, increase share of shelf space and drive sales through the channels. However, trade schemes get limited by the cost incurred by the company as well as the limitations of the trade in India to stock up free goods. Incentives can be overseas trips and gifts.

A typical trade scheme on soaps would be buy a case of 12 soaps, get 1 or 2 free - or a 8% discount scheme (1/12=8%). Such schemes are common in FMCG and pharma industries.

But sales promotion activity aimed at the final consumer are called consumer schemes. These are used to create a pull for the product and are advertised in public media to attract attention. Maximum schemes are floated in festival times, like Diwali or Christmas. Examples are buy soap, get diamond free; buy biscuits, collect runs; buy TV and get some discount or a free item with it and so on. Consumer schemes become very prominent in the 'maturity or decline' stages of a product life cycle, where companies vie to sell their own wares against severe competition.

The impact of sales promotions: Sales promotions typically increase the level of sales for the duration they are floated. Usually, as soon as the schemes end, the sales fall, but hopefully, settle at a higher level than they were before the sales promotion started. For the company, it can be a means to gain market share, though an expensive way.

For consumers, these can offer great value for money. But sustained sales promotions can seriously damage a brand and its sales, as consumers wait specifically for the sales promotion to buy and not otherwise. Therefore, sales promotions are to be used as a tactical measure as part of an overall plan, and not as an end itself.