Purpose – The purpose of this paper is to examine two key dimensions of instore marketing, namely instore promotions and price markdowns. These seem to be the two most important aspects of instore marketing, though other dimensions such as retail personal service are also worthy of study. Design/methodology/approach – A sample of 287 New Zealand clothing and shoe retailers was studied. Survey questions included the perceived importance of instore promotions and price markdowns. The aim was to explain these perceptions in terms of marketing strategies, threat of competition and environmental uncertainty. Findings – The results indicate that a discount marketing strategy, environmental uncertainty and emphasis on pricepromotions are key to explaining retailers' perceptions and use of specific instore marketing activities. In addition, seven key marketing activities were found to distinguish high and lowperformance retailers with respect to instore promotions. Practical implications – The study has highlighted strategic aspects of instore marketing, by focusing on two key components of instore marketing, namely instore promotion and price markdowns. The findings should provide much needed advice to retailers on the use of sales promotion tools in different environmental settings. Originality/value – This paper should prove valuable to academic researchers and retailing managers (particularly to those in smaller countries), owneroperated retail outlets, and chain stores. © 2011, Emerald Group Publishing Limited