What is business promotion? A comprehensive guide and types

By Indeed Editorial Team

Published 11 July 2022

The Indeed Editorial Team comprises a diverse and talented team of writers, researchers and subject matter experts equipped with Indeed's data and insights to deliver useful tips to help guide your career journey.

Different organisations and brands use various marketing strategies, such as business promotion, to attract new customers, spread messages to their target audiences and boost the sale of goods and services. They may use diverse techniques, such as direct marketing, personal selling and PR, to achieve their intent. Selecting the appropriate business promotion technique can help you increase organisational revenue and create a strong brand image. In this article, we answer the question 'What is business promotion?', explain the differences between business promotion and advertising and expound on the types of business promotion.

What is business promotion?

To learn the answer to 'What is business promotion?' you can study what it entails and its different types. Business promotion is a strategy that businesses use to increase sales of their products and services. It's one component of the marketing mix, comprising product, price, place and promotion. Business promotion involves using different platforms to encourage consumers to purchase items.

Related: What is promotional pricing? (With advantages and examples)

Differences between business promotion and advertising

There are several differences between business promotion and advertising, such as the specific categories they belong to. Other differences include:

Definition

Business promotion is a venture that involves persuading customers to buy products to increase sales. Businesses do this by using flyers, social media and direct person-to-person selling. Advertising informs consumers about a product or service through a paid network, such as television ads. Advertising is a subset of business promotion.

Aims

The business promotion aims to target consumers who already know about a product, service or brand and influence them to make purchases. The main aim of this exercise is to boost sales. Advertising reaches consumers who may or may not know about a specific brand. The main objective of advertising is to build a brand image. Business promotion strategies have an immediate effect, while the impact of advertising can take time.

Approach

Advertising uses an indirect approach to create awareness about a product, while a business promotion is more direct. For example, if you're advertising a new phone model, you could describe the physical size, internal storage, camera quality and improvements compared to previous models. If you're using business promotion techniques to sell the new phone model, you might emphasise discounts and offers or provide free earphone samples with every phone purchase.

Costs

Advertising can be an expensive venture. Placing ads on television, radio and other paid platforms can increase a business's costs. Business promotion may be cheaper. Companies use sales promotions to generate immediate cash flow, which they can use to pay short-term expenses. Advertising may take time to generate sales.

Related: Definition of place mix in marketing (plus the components)

Types of business promotion

Here are some of the types of business promotion:

Direct marketing

Direct marketing, also known as direct response, is a promotion technique where businesses communicate directly with consumers. This technique eliminates their requirement for intermediary marketing. Companies can directly inform customers about promotions through:

  • emails

  • text messages

  • flyers

  • social media ads

  • website ads

Related: 5 key marketing functions (with definition and purpose)

Personal selling

Personal selling involves sending sales representatives directly to the consumers. They inform customers about offers, free samples or coupons and convince them to purchase items. This method allows sales representatives to get customer feedback, which businesses can use to improve their products.

Related: What does a product promoter do? (Definition and skills)

Advertising

Advertising is one of the most common business promotion strategies that companies use. It involves spreading awareness about a company's product, service or brand on paid platforms, such as radio, television and print. Advertising can increase costs, so conducting a cost-benefit analysis to determine the value of running advertisements can be useful to decide if it's a worthwhile venture.

Related: 9 different advertising techniques and how they work

Public relations

The way consumers perceive a business can affect sales. Companies can improve sales by collaborating with charity organisations or sharing their environmentally friendly values. Public relations ventures involve maintaining the company's image by issuing press releases and editing content on its website and social media profile. The company also manages and analyses the data from customer reviews about company products.

Related: The difference between publicity vs public relations

Sales promotion

Sales promotion is a technique that businesses use to encourage consumers to make immediate purchases. This technique is effective when the business limits the promotion to a specific period or product quantity. For example, selling the first 100 pairs of shoes at a discounted rate can increase sales. Examples of sales promotion techniques are:

  • buy one, get one free (BOGOF)

  • discounts

  • coupons

  • free samples or accompanying items

  • loyalty cards

  • free trials

Benefits of business promotion

Here are several benefits of using business promotion techniques:

Reaching new customers with the same products

Business promotion techniques involve persuading existing customers to purchase products and services, such as giving discounts and free samples. During this exercise, a company may reach new customers and introduce them to its brand. This can improve sales while attracting new customers to the company's products.

Introducing new products

A company might use promotional strategies to introduce new products to the market. For example, a company launching a new product or service can use promotional techniques, such as advertising, direct marketing and sales promotion, to inform customers about the product. It can also send emails and social media updates, advertise on television and radio and offer discounts for the first subset of customers to purchase new items. This can increase loyalty from existing customers and introduce new customers to the company's brand.

Related: 14 helpful tips for successfully introducing new products

Identifying target markets

When a company runs a promotional campaign, it researches the most effective business promotion techniques depending on the product, such as which platforms to use and which markets to target. For example, if an insurance company is promoting insurance services, it might research which platform has the highest outreach, which sales promotion attracts the most significant number of new customers and which audience is most receptive to its insurance services. This allows the company to discover its target market and tailor new products to meet consumer demand.

Related: What is a target market and why is it important? A guide

Increasing revenue

Sales promotions, such as buy one, get one free and discounts, encourage customers to purchase items. Sales representatives persuade customers to buy a product by showing them its unique qualities. Advertisements reach potential customers and inform them about products that may interest them. Direct marketing strategies, such as emails and text messages, notify customers about clearance sales and product offers. All these actions can lead to an increase in sales, which translates to an increase in revenue.

Improving customer loyalty

Offering a percentage reduction in price for a product without altering its quality can improve customer loyalty. Sales representatives create a good rapport with customers as they promote products, enhancing their experience with the brand and convincing them to stay loyal to the company product. Companies can also use customer loyalty to encourage sales. For example, they may run social media campaigns encouraging loyal customers to post pictures of specific products and choose an individual to win a prize. This may prompt loyal customers to take action, increasing product awareness.

Differentiating company products

Promotion strategies allow businesses to differentiate their products and services from similar products by their competitors. This allows a business to showcase unique features about its products or services that customers may not know. For example, when a company uses personal selling as a promotion technique, sales representatives explain the features that distinguish it from other products, encouraging customers to buy.

Getting feedback

Business promotion lets customers give feedback about their experience with a company's products and services. Companies might receive feedback through social media, website comments, verbal feedback through sales representatives or email responses. The company can then analyse this information and adjust its products and services to meet customer demand.

Clearing inventory

Sales promotions allow businesses to clear excess stock. Even though this might not lead to a profit, it provides room for new stock and reduces warehouse storage costs. Clearance sales typically attract new customers, introducing them to a company's brand.

Increasing website traffic

Promotional techniques increase awareness about a company's products, prompting existing and new customers to search for these products online. An increase in traffic on search engines can place a company's website or social media profile near the top of a search page. This makes the website more visible to consumers.

Upselling and cross-selling

This concept involves upselling, where you convince a consumer to purchase an expensive item and cross-selling, where you offer a related item at a lower price or no extra cost. For example, a sales representative might sell a laptop at a high price and provide a free mouse, mouse pad and laptop bag. This concept allows businesses to increase revenue without spending money on advertisements.

Related:

  • What is a promotional mix and how is it used? A guide


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