Difference between Discount and Promotion

Key Difference: Sales Promotion helps create hype for the product. It is something that is done to make people aware of something and increase its sales or popularity. Discounts and allowances are reductions to a basic price of goods or services.

In order to successfully sell a product, a seller has to engage in certain tactics. Some of these commonly include promotion and offering discounts. Traditionally, there are seven aspects of the promotional mix: sales promotion, advertising, personal selling, direct marketing, publicity/public relations, corporate image and exhibitions. Each one has a special function that aims to create a market for the product and help sell it.

One of these aspects is the Sales Promotion method. This method helps create hype for the product. It makes people aware of the product, so that they may buy it and help increase the sales and/or popularity of the product.

In fact, there are actually three basic objectives of promotion:

  • To present information to consumers as well as others.
  • To increase demand.
  • To differentiate a product.

There are various ways to promote a product, including internet advertisement, special events, endorsements, and newspapers. Imagine that when one opens the morning paper, there is an advertisement for a new type of cereal. Then, when checking their e-mail, the person sees yet another advertisement on the web browser. Then, in the evening when they visit the supermarket, they see a booth set up telling people about this new cereal and perhaps even giving them the opportunity to try it. These are all forms of promotion. If successful, they will ensure that the customer buy the product.

However, while asking the customer to try the cereal, if they also offer to sell them the cereal at a lower price that then market, they are offering a discount. Essentially, sales discounts are amounts taken off a regular product price at the time of purchase to induce a customer to buy.

In addition to a regular customer, a discount can be offered to distributors, retailers, manufactures, etc. In fact, a discount can be offered anywhere in the distribution channel: from a raw product seller to manufacturer, a manufacturer to distributor, a distributor to a retailer, a retailer to a customer, etc.

In fact, as the discount is offered to create hype for the product, it serves the purpose of a promotion. Hence, it can be said that a discount is a type of promotion, and they both share a common goal, that is to sell the product. However, promotion is more long run as it aims to create name for the product, whereas the discount aims to just sell the product and increase sales in the short run.

Comparison between Discount and Promotion:

 

Discount

Promotion

Definition

Discounts and allowances are reductions to a basic price of goods or services.

Something that is done to make people aware of something and increase its sales or popularity.

Part of

Sales Promotion.

One of the seven aspects of the promotional mix: sales promotion, advertising, personal selling, direct marketing, publicity/public relations, corporate image and exhibitions.

Directed at

Anyone in the distribution channel, modifying either the manufacturer's list price (determined by the manufacturer and often printed on the package), the retail price (set by the retailer and often attached to the product with a sticker), or the list price (which is quoted to a potential buyer, usually in written form).

Either the customer, sales staff, or distribution channel members (such as retailers)

Purposes

To increase short-term sales, to move out-of-date stock, to reward valuable customers, to encourage distribution channel members to perform a function, or to otherwise reward behaviors that benefit the discount issuer.

To stimulate product interest, trial, or purchase. To attract new customers, to hold present customers, to counteract competition, and to take advantage of opportunities that are revealed by market research.

End Function

To enhance short term company sales

To enhance company sales and/or to introduce a new product.

Types

  • Discounts and allowances dealing with payment
  • Discounts and allowances dealing with trade
  • Discounts and allowances dealing with quantity
  • Discounts and allowances dealing with customer characteristics
  • Discount card
  • Coupons
  • Rebates
  • Consumer sales promotions – targeted at consumers
  • Trade sales promotions – targeted at retailers and wholesalers
  • Retail Mechanics – Buy One Get One Free

Examples

Discounts include summer discount, Coupons, Rebates, Senior discount, Student Discount, End of stock discount, clearance sale, buy one get one free discount, etc.

Sales promotion includes coupons, samples, premiums, point-of-purchase (POP) displays, contests, rebates, and sweepstakes.

Image Courtesy: govietnamvisa.com, blog.tnphost.com

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