Sales promotion 101: discounts, coupons, sampling, prize draws and trade deals

Sales promotion adds a reason to act now to the product itself: a lower price, more for the same money, a free sample, a chance to win, or a better deal for the retailer that stocks it. Consumer promotions speak to shoppers; trade promotions are deals between a brand and its retailers or distributors (discounts, display fees, listing support); shopper marketing works on the moment of choice in store and online, increasingly through retail media.

In one line: sales promotion is the most direct lever on short-term sales, and the easiest one to overuse.

A promotion has three parts: the mechanic (what the shopper gets and how), the terms (who can take part, until when, with what limits) and the fulfilment (how the discount is applied, the coupon redeemed, the prize awarded). In the language of the effectiveness literature it is sales activation: it pulls buyers forward rather than building the memory structures that brand building creates.

Trade promotions and shopper marketing

Much promotional money never reaches the shopper directly. Trade promotions pay retailers and distributors to cut the shelf price, give the product a display or an end-of-aisle position, feature it in a leaflet or list a new line. Shopper marketing plans the last metres of the journey: packaging, displays, in-store media and the retailer's own website and app, where sponsored listings are sold as retail media. Both are negotiated with the retailer, so the brand controls only part of what the shopper finally sees.

What the evidence says

The best-known studies come from Andrew Ehrenberg and colleagues, whose work founded what is now the Ehrenberg-Bass Institute. Their international study of grocery brands found that price promotions produced short sales spikes with no after-effect on later sales or loyalty, and that the extra buyers had almost all bought the brand before¹⁹. Ehrenberg and Kathy Hammond concluded that price-related promotions are used mainly by a brand's past customers, attract few new ones, and often lose money²⁰. Les Binet and Peter Field's analysis of the IPA Databank distinguishes short-term sales activation from long-term brand building, and finds that brand building, not activation, is what reduces price sensitivity over time²².

The practical lesson is to judge a promotion by its incrementality: the sales and profit it adds over what would have happened without it, measured against a baseline or a holdout region or store.

Coupons are as old as branded goods. In 1887 Coca-Cola handed out hand-written tickets for a free glass of the drink, then priced at five cents, an idea credited to the Atlanta businessman Asa Candler and an early example of the coupon in America²⁴.

Measurement then caught up with the habit. In 2014 a Nielsen review of promotions in US consumer goods found that about three-quarters did not break even²³. Regulators turned to the honesty of "was" prices: the EU's Omnibus Directive of 2019 added a rule on announcing price reductions to the Price Indication Directive¹⁰¹¹.

Promotions are used in every region, most heavily in fast-moving consumer goods and retail, where they are part of the annual negotiation between brands and retailers. Seasonal sales are often regulated events: Dubai runs retail promotions through its festivals and a permit system¹⁵¹⁷, and Saudi Arabia licenses discount seasons through its Ministry of Commerce¹⁸.

• Europe. In the UK, promotions follow Section 8 of the CAP Code, enforced by the ASA¹. In the EU, the Omnibus rules on prior prices apply in every member state¹⁰.
• Americas. In the US, the FTC's guide on the word "free" has long shaped how offers are worded⁸⁹; Nielsen's 2014 figures on promotions that did not pay back came from the US market²³.
• Middle East and Africa. Dubai issues permits for discounts, offers and raffles¹⁵¹⁷ and launched a digital platform for raffles and draws in 2021¹⁶; Saudi stores apply electronically for discount licences¹⁸.
• Asia-Pacific. Promotions are a staple of retail across the region under national consumer and advertising laws; this primer has no comparable sourced figures to give.

Promotions suit conversion of shoppers already in the category, a product launch that needs trial (sampling, introductory prices), customer acquisition when a coupon is the reason to try, and retention and loyalty when offers are tied to a loyalty programme. Prize promotions also gather entries and opt-ins for event promotion and campaigns.

They matter most in consumer goods and retail and e-commerce, and are common in hospitality and travel and automotive. In an integrated plan, advertising builds the brand that a promotion then cashes in; a promotion with a clear call to action can carry the campaign's message to the shelf. The discipline's hub is sales promotion; see also the brand manager page.

The cost of a promotion is mostly what it gives away: the margin on every discounted unit (including units that would have sold at full price), the face value of redeemed coupons, the product handed out as samples, the prizes, and the trade money paid to retailers for price cuts and displays. On top come handling, printing, agency fees and, for draws, independent supervision.

That spending is large. A 2026 study by Les Binet and Dom Boyd for the IPA, based on a survey of 250 UK consumer goods leaders, found that brands spend roughly twice as much on price promotions as on paid media²¹.

In the same study, 76% of marketers said they repeat promotions without assessing their profitability, 81% evaluate them over periods shorter than 13 weeks, and 80% believe many promotional buyers would have bought anyway; the authors recommend measuring each promotion and moving money from loss-makers into brand advertising²¹. This primer gives no averages of its own.

This section describes the main frameworks; it is not legal advice.

• United Kingdom. Section 8 of the CAP Code covers promotional marketing, including on packaging and at the point of sale¹. Promoters are responsible for every stage of a promotion, whatever the platform, and are advised to take legal advice before a prize draw so as not to run an unlawful lottery². All significant conditions must be stated where leaving them out is likely to mislead, normally in the first marketing material⁵. Prizes must be awarded as described, or a reasonable equivalent, normally within 30 days; in 2025 the ASA ruled against a social media giveaway that stopped running⁴. Changing a promotion's entry route part way through has been found unfair to those who entered under the old terms³. Prize draws decided by chance need no licence under the Gambling Act 2005 when they offer a free entry route; a government voluntary code for operators of paid draws asks that this route be publicised and accessible, with signatories complying by 20 May 2026⁶⁷.
• United States. The FTC's guide on "free" says the public understands a "free" offer to be based on the regular price of the item that must be bought, so such offers must be made "with extreme care so as to avoid any possibility that consumers will be misled or deceived"⁹; all the terms for getting and keeping the free item should be set out clearly and conspicuously at the outset⁸.
• European Union. The Omnibus Directive (EU) 2019/2161 amended four consumer laws, including the Price Indication Directive, and set maximum fines for widespread infringements of at least 4% of annual turnover, or €2 million where turnover data is not available¹¹. Its new Article 6a requires any announced price reduction to show the prior price, meaning the lowest price applied over a period of at least 30 days before the reduction¹⁰. Commission guidance says the rule does not apply to ordinary price changes made without an announced reduction, or to general price comparisons with competitors¹².
• France. Since the 2014 consumer law, promotional lotteries fall under the Consumer Code alone, separate from gambling lotteries, which fall under the Internal Security Code¹³. The Consumer Code bans advertising lotteries only when they are unfair; contests decided by skill rather than chance fall outside the definition¹⁴.
• Dubai. The Department of Economy and Tourism (DET, formerly Dubai Economy and the DED) issues permits for promotions. A 2020 legal note said draws could offer benefits, in-kind prizes or vouchers, and that raffle tickets could not be sold for cash¹⁵. For festival promotions, retailers apply online through DET Connect with their trade licence, with processing in three to five business days¹⁷.
• Saudi Arabia. Shops and online stores must hold a Ministry of Commerce licence to advertise discounts, applied for electronically¹⁸.

• Borrowed sales. Promotional volume comes mostly from existing buyers and leaves no lasting lift¹⁹²⁰; much of it is sales pulled forward or given away.
• Unprofitable by default. About three-quarters of US promotions did not break even in Nielsen's 2014 review²³.
• Measured too soon. 81% of UK marketers judge promotions over less than 13 weeks²¹, too short to see what happens after the spike.
• Price sensitivity. Activation does not reduce price sensitivity the way brand building does²²; frequent deals can teach shoppers to wait.
• Fake reductions. In the EU a "was" price must be the lowest of the last 30 days¹⁰; in the UK, conditions must be clear from the start⁵.
• Draws that become lotteries. Without a genuine free route, a paid draw in the UK may need a licence⁶; check the law in every market.
• Fulfilment failures. Prizes not awarded on time breach the CAP Code⁴.

• More scrutiny of reference prices. The EU's 30-day rule¹⁰ and the Commission's guidance¹² set the test for discount claims across the single market.
• UK prize-draw standards. The voluntary code for prize draw operators applied from 20 May 2026, and the government has said it will consider other options if it is not implemented or complied with⁶.
• Promotions held to account. Binet and Boyd call for every promotion to be measured, and for money to move from loss-making promotions to brand advertising²¹.
• Digital permits in the Gulf. Dubai's raffles platform and DET Connect¹⁶¹⁷, and Saudi Arabia's electronic discount licences¹⁸, put promotions on official portals.

Choose it when you need a short, measurable push and can check that the push pays. Pair it with advertising so the brand carries the price, and with CRM and loyalty to target offers to the right customers, and use which mix for which objective to weigh it against the other disciplines.