What Is a Sales Promotion?

Sales promotion is a marketing strategy that provides short-term incentives to increase brand awareness and sales for a product. Companies can use promotions to introduce new products to targeted demographics, increase sales during slow periods or sell out extra inventory.


A well-planned sales promotion adds value for customers and helps retain them. However, it’s important to design and promote promotions that align with the company’s overall business strategy.

1. Attract New Customers

Sales promotions are a great way to attract new customers. They can be used to offer a discount or free sample to encourage people to try out a product or service for the first time. This can help businesses build brand loyalty and generate positive word-of-mouth recommendations. They can also be used to generate buzz around a product launch or to create a sense of urgency or scarcity in the market.

They can also be used to encourage consumers to upgrade their purchases or buy complementary products (cross-selling) and increase average transaction value. This can help businesses reduce inventory costs and increase revenue overall.

Another advantage of sales promotions is that they can be used to clear out extra inventory. This can be a useful tool when a business has too much of a particular product on hand and wants to make room for new stock. However, it is important to be careful when using this strategy because too many sales promotions can damage a company’s reputation by making customers feel that your products are only worth a smaller price tag.

It can also be difficult to track the results of a sales promotion. It is important to define a goal for each campaign and to measure whether or not the goal has been achieved. Sales promotions often require customers to provide contact information or participate in a survey, which can be a good opportunity for businesses to gather customer data and insights that they can use in future marketing efforts or to develop personalised targeting.

2. Increase Sales of Existing Products

Sales promotion helps companies increase their revenue by boosting sales of existing products. It also helps them clear out extra inventory, whether from a new product launch or a seasonal slowdown. Sales promotions can also be used to encourage repeat purchases from loyal customers and build brand loyalty.

Offering a discount or a voucher for a free product when a customer makes a purchase is a popular sales promotion. Many retailers use this strategy to promote their holiday or seasonal products, such as Michael’s craft stores which run sales on themed decorative items towards the beginning and end of each year.

Companies can also boost sales of their current products by emphasizing their value or highlighting key features that distinguish them from competitors. Creating a sense of urgency or scarcity by making the offer short-term can add an element of exclusivity and encourage customers to buy.

Another way to boost sales of existing products is to host a special event, such as a live demonstration or in-store event that allows customers to experience the product first-hand and meet company representatives. This type of marketing is especially useful for introducing new products and improving the company’s public image, such as Samsung’s successful Note series mobile phones which were later found to be fire and explosion hazards. It can also be used to keep customers engaged with the company after they make a purchase by promoting promotional emails and newsletters.

3. Clear Out Extra Inventory

Having too much inventory is one of the biggest no-no’s for retailers. It ties up capital and prevents them from investing in new stock that better suits the target market. Plus, it can occupy valuable backroom or shelf space that could be used for more profitable merchandise.

One way to clear out slow-moving merchandise is with a clearance sale. This is a great opportunity to attract bargain hunters and drive traffic to your website or physical store. However, be careful not to run too many sales and confuse customers or you will lose the effectiveness of your promotional strategy.

Another great way to get rid of slow-moving products is with a bundle or multi-buy offer. This is a great promotional strategy that not only helps to move inventory but also increases average order value. For example, Leo + Zo offers a buy 3 items, get 15% off promotion. This not only helps to reduce inventory but also allows the company to upsell and add additional products such as diapers, wipes and shirts to the customer’s cart.

A final way to clear out excess inventory is with a giveaway or competition. This is a great way to build brand awareness and can be especially effective when it’s tied in with an email capture or social media promotion. For example, you might hold a competition where the first 100 people to like or share a post are entered into a prize draw to win a free product.

4. Retain Customers

Sales promotion strategies are a great way to attract new customers, promote an existing product, clear out extra inventory and even boost your customer retention rates. By leveraging short-term incentives, businesses can create an urgency and desire for your products that can lead to a significant increase in sales.

Your repeat customer rate is a key indicator of your store’s success. It is the percentage of your existing customers who buy from you again, and it is a vital metric to measure when assessing your marketing strategy.

If you notice that your repeat purchase rate is dropping, it’s time to fine-tune your current customer retention strategies. This can include making onboarding more engaging, acting quickly on feedback and rewarding loyal customers with rewards. It also means offering ongoing support and a personalized experience that makes them feel like a valued brand ambassador.

Other tactics to keep in mind are leveraging social media, providing helpful content and holding special events for your most valuable buyers. For example, Spalding invites their MVP club members to exclusive events that give them access to a variety of discounts. This strategy keeps them engaged, showcases your helpfulness and bolsters loyalty for your business. It can also help you convert them to brand ambassadors that spread your word for free. This is a win-win scenario for both parties.