What is a Promotion?

Updated on May 24, 2018
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Heidi Thorne is an author and business speaker with over 25 years of experience in sales, marketing, advertising, and public relations.

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The word promotion can take on a couple of meanings. Promotion, in general, refers to any activity in support of a person, group, organization or cause which includes advertising and public relations. However, in the singular definition, a promotion refers to a sales, advertising and marketing effort to encourage buying or buy in.

Put another way, promotion gets the word out while a specific promotion brings the buyers in.

So what is a promotion exactly?

Discounts, Rewards and Incentives

A promotion is usually a discount, reward or incentive to encourage people to buy or try a product or service or even to donate. Some common examples include:

  • Discounts offered for a limited time or for selected products.
  • Coupons.
  • Reward points and loyalty programs.
  • "Freemiums" which offer free trial versions of products or services, frequently used for software, training and online services.
  • Promo codes entered during online checkout.
  • Buy One, Get One (BOGO) deals.
  • Larger size or quantity products or services offered for same price as smaller (i.e. "20% more free").
  • Free related product with purchase (i.e. bottle of conditioner offered free with shampoo purchase).
  • Special financing offers.
  • Extended or lifetime warranties.
  • Free promotional product given before or with purchase or donation (i.e. free T shirt or tote bag given when a charitable donation is made).
  • Limited editions (i.e. collectible coins, dolls).
  • Free gifts or giveaways to encourage desired behaviors (i.e. distributing CFL light bulbs to encourage people to use less electrical energy).
  • Loss leaders (i.e. orange juice or milk is offered for an extremely low price to encourage sales of other more expensive products at retail).
  • Free shipping and handling for qualifying orders.

For a Limited Time Only...

While many organizations offer promotions continuously, they are more effective and trackable when they are offered for a limited time. As well, they are typically timed to help boost sales or participation during slow times, to maximize sales during peak seasons, to create work for underutilized personnel, or to reduce inventory.

Some examples:

  • Model year closeout sales at car dealers for previous year's models to boost sales for the end of the calendar year and reduce standing inventory.
  • Deeply discounted gift items at department stores from Black Friday through Christmas to maximize holiday and year-end revenues.
  • Collectibles offered for pre-order discounted prices so that manufacturers can more accurately project potential sales and reduce future inventory issues.
  • Lunch specials at restaurants which have a larger dinner volume.
  • Early A.M. Black Friday specials which can be handled while store personnel prepare the store for regular store hours.

The Bargain Buyer Challenge

Essentially, a promotion forfeits sales revenue in the hope of achieving even greater revenues from additional sales. Therefore, setting limits on a promotion are critical to avoid the problem of making sales while losing profits.

One of the biggest challenges with promotions is that many bargain buyers may only buy to take advantage of the discount or deal, but have no intention or desire to become loyal customers. In this way, promotions can become a very expensive part of the marketing budget.

Some of the primary ways that promotions can set limits include:

  • Limited time offers.
  • Offers to new customers or returning customers only.
  • Purchasing requirements (i.e. free shipping on orders over $200)
  • Limiting offers to selected products or services (i.e. coupons good on restaurant carryout or delivery service, but not dining in).
  • Restricting availability to specific retail locations.
  • Requiring surrender of coupons, promo codes or gift certificates upon redemption.

Promoting the Promotion

One of the other ways that a promotion can destroy a marketing budget is in the promotion of the promotion!

Coupons, promo codes and advertising for specials can easily run into the thousands of dollars. One need only watch the promotional advertising on television to realize how much promotion has to be done to achieve sales goals.

In addition to the forfeited sales revenues, determine how much advertising will have to be done to achieve desired results. If the potential costs or losses are too high, additional limits on promotion offers or adjustments to advertising need to be made.

Tracking Results

Offering a promotion without a way to track it is a waste of money! Therefore, tracking of offers made and redeemed is essential to measure the success of any promotion.

Some of the most common ways to track promotions include:

  • Promo codes entered online checkout.
  • Coupons.
  • Reward or loyalty cards presented when purchasing.
  • Tracking sales of particular products or services during promotion period.
  • Overall revenue trends up or down.
  • Website or store visits.
  • QR code scans.

Setting goals for each promotion in terms of offers redeemed, sales achieved or visits to online or offline locations needs to be set in advance so that the success of the promotion can be measured.

Disclaimer: The author/publisher has used best efforts in preparation of this article. No representations or warranties for its contents, either expressed or implied, are offered or allowed and all parties disclaim any implied warranties of merchantability or fitness for your particular purpose. The advice, strategies and recommendations presented herein may not be suitable for you, your situation or business. Consult with a professional adviser where and when appropriate. The author/publisher shall not be liable for any loss of profit or any other damages, including but not limited to special, incidental, consequential, or other damages. So by reading and using this information, you accept this risk.

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    © 2013 Heidi Thorne

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