Sales Promotion
Javed Mahmud
August 2020
Sales Promotion
A direct inducement that offers an extra value or
incentive for the product to the sales force,
distributors, or the ultimate consumer with the
primary objective of creating an immediate sale.
• some type of inducement that provides an extra incentive
to purchase the product or service
• an acceleration tool that is designed to speed up the
selling process and maximize sales volume
• can be targeted to different parties in the marketing channel
including wholesalers, retailers and consumers.
Sales Promotion Vehicles
Consumer-Oriented Trade-Oriented
Samples Contests, Dealer
Incentives
Coupons Trade Allowances
Premiums Point of Purchase
Displays
Contests / Sweepstakes Training Programs
Refunds / Rebates Trade Shows
Bonus Packs Cooperative Advertising
Price-off Deals
Frequency Programs
Reasons for Increase in Sales
Promotion
Growing Power of Retailers
Declining Brand Loyalty
Increased Promotional Sensitivity
Brand Proliferation
Fragmentation of Consumer Markets
Short-Term Focus
Increased Accountability
Competition
Clutter
Concerns About the Increased Role of Sales Promotion
The increased use of sales promotion is coming
at the expense of media advertising.
Increased use of sales promotion may have a
negative effect on brand equity (a type of
intangible asset of added value or “goodwill”
resulting from the favorable image or
differentiation that a brand has achieved.
Consumer Franchise-Building versus
Nonfranchise-Building Promotions
Consumer-franchise-building promotions
are designed to communicate distinctive brand
attributes and contribute to the development
and reinforcement of brand image and identity.
Non-franchise-building promotions are
designed to accelerate the purchase decision
process and generate immediate increases in
sales. They do very little, if any, to contribute
to the brand identity and image
Consumer Franchise-Building versus
Nonfranchise-Building Promotions
Contests can be used to build brand equity
Sales Promotion Uses
Introduce new products by encouraging trial and
repurchase
Get existing customers to buy more
Target a specific market segment
Enhance IMC efforts and build brand equity
Attract new customers
Defend current customers
Maintain sales in off season
Arm & Hammer uses a promotion offer to
encourage new use of its products
Pran uses a promotion offer to target a
specific market segment
Sampling
Providing consumer with some
quantity
of a product for no charge to
induce trial
Sampling works best when:
The products are of relatively low unit value, so samples
don’t cost much
The products are divisible and can be broken into small sizes
that can reflect the products features and benefits
The purchase cycle is relatively short so the consumer can
purchase in a relatively short time period
Sampling Methods
Door-to-door
Direct mail
In-store sampling
Cross-product sampling
With newspaper or magazine
Through the internet
Free Samples through the Internet
Coupons
A coupon is a ticket or document that can be
exchanged for a financial discount or rebate when
purchasing a product.
Coupons
The oldest and most widely used sales promotion
tool
Nearly 240 billions distributed each year in the
United States
80 percent of consumers use coupons and 25%
use them regularly
Advantages and Limitations of
Coupons
Advantages: Disadvantages:
• Appeal to price • Difficult to determine how
sensitive consumer many consumers will use
• Can be effective way coupons and when
to induce trial of new or • Coupons are often used
existing products by loyal consumers who
• Can be way to defend may purchase anyway
market share and • Declining redemption
encourage repurchase rates and high costs of
couponing
• Misredemption and fraud
Coupon Fraud
Consumers redeem without purchase
Criminals collect or counterfeit and sell
Coupon Distribution
Other
Magazines
In / On Pack
Direct Mail
Newspaper Coop
Newspaper ROP
Freestanding
Inserts
Coupon Trends
Major companies cutting back on use of coupons
Searching for more effective coupon techniques
More use of internet for distribution
Premiums
Premium – an offer of an item of
merchandise or service either free or
at a low cost that is an extra incentive
for customers
Two types of premiums:
Free premiums -
only require purchase of the product
Self-liquidating premiums-
require consumer to pay some or all of the cost of
the premium
Premium Incentives
Contests and Sweepstakes
Contest – a promotion where consumers compete
for prizes or money on the basis of skills or
ability. Winners are determined by judging
entries or ascertaining which entry comes closes
to some predetermined criteria
Sweepstakes/games – a promotion where
winners are determined purely by chance and
cannot require a proof of purchase as a condition
for entry. Winners are determined by random
selection from the pool of entries or generation of
a number to match those held by game entrants.
Contests and Sweepstakes
Other Popular Consumer Sales
Promotion Tools
Refunds and Rebates
offers by the manufacturer to return a portion of the
product purchase price, usually after the consumer
supplies some proof of purchase.
Other Popular Consumer Sales
Promotion Tools
Bonus Packs
– offer the consumer an extra amount of a product at the
regular price by providing larger containers or extra units
Other Popular Consumer Sales
Promotion Tools
Price-off deals
reduces the price of the brand
Frequency/loyalty programs
promotional program aimed at encouraging repeat sales
by rewarding customers on buy frequently or on regular
basis.
Other Popular Consumer Sales
Promotion Tools
Event marketing
Event marketing is a promotional strategy that involves
face-to-face contact between companies and their
customers at special events like concerts, fairs, and
sporting events.
Consumer-Oriented Sales Promotion Tools for
Various Marketing Objectives
Trade-Oriented Sales Promotion
Objectives
Obtain Distribution of New Products
Maintain Trade Support for Existing Products
Encourage Retailers to Display and Promote
Existing Brands
Build Retail Inventories
Chicken of the Sea targets the trade with this
collateral piece
Types of Trade-Oriented Promotions
Contests and Incentives
to stimulate greater selling effort and support from reseller
management or sales personnel
Trade Allowances
a discount or deal offered to retailers or wholesalers to encourage
them to stock, promote, or display the manufacturer’s products
• Buying Allowances
a deal offered to resellers in the form of a price reduction on
merchandise ordered during a fixed period.
• Promotional Allowances
Discounts for performing certain promotional or merchandising
activities
• Slotting Allowances
a special allowance for agreeing to handle a new product
Types of Trade-Oriented Promotions
Point-of-Purchase Displays
a specialized form of sales promotion found near, on,
or next to a checkout counter (the "point of sale"),
where purchase decision are often made.
Sales Training Programs
training sessions present information and ideas on how
to sell the manufacturer’s product and may also
include motivational components
Trade Shows
a forum where manufacturers can display their products
to current as well as prospective buyers
Types of Trade-Oriented Promotions
Cooperative Advertising
• the cost of advertising is shared by more than one
party
• Horizontal cooperative advertising
• sponsored in common by a group of retailers or other
organizations providing products or services to the market.
• Ingredient-sponsored cooperative advertising
• supported by raw materials manufacturers
• Vertical cooperative advertising
• a manufacturer pays for a portion (50%) of the advertising a
retailer runs to promote the manufacturer’s product in the
retailer’s place of business.
The “Intel Inside” campaign is an example of
ingredient-sponsored cooperative advertising
Coordinating Sales Promotion With Other IMC
Elements
Various IMC elements such as advertising,
direct marketing, Internet and personal
selling efforts need to be coordinated with
sales promotion to create a synergistic
effect.
IMC and the Product Life Cycle
Coordinating Sales Promotion With Other IMC
Elements
Must consider:
Budget allocation
Coordination of ad and promotion themes
Media support and timing
Measuring effectiveness
Sales Promotion Abuse
• Marketers are becoming too dependent on using sales
promotion to produce short-term or immediate increases
in sales
• Investing in sales promotion at the expense of
advertising and thus not building the long-term value of
the brand franchise
• Brands losing their perceived value from the perspective
of consumers when they are purchased because of a
promotional offer
The Sales Promotion Dilemma
Our Firm
Cut Back Maintain
Promotions Promotions
Maintain Same market
We lose
Promotions share, profits stay
market share
low
All Others
Cut Back Higher profits We gain in
Promotions for everyone market share
Q&A
