SALES PROMOTION



Sales Promotion 107
Photo by: James Steidl

Sales promotion is an important component of a company's marketing communication strategy along with advertising, public relations, and personal selling. At its core, sales promotion is a marketing activity that adds to the basic value proposition behind a product (i.e., getting more for less) for a limited time in order to stimulate consumer purchasing, selling effectiveness, or the effort of the sales force. As this definition indicates, sales promotion may be directed either at end consumers or at selling intermediaries such as retailers or sales crews.

Sales promotion stems from the premise that any brand or service has an established perceived price or value, the "regular" price or some other reference value. Sales promotion is believed to change this accepted price-value relationship by increasing the value and/or lowering the price. Familiar examples of consumer sales promotion tools include contests and sweepstakes, branded give-away merchandise, bonus-size packaging, limited-time discounts, rebates, coupons, free trials, demonstrations, and point-accumulation systems.

Three issues clarify sales promotion. First, sales promotion ranks in importance with advertising and requires similar care in planning and strategy development. Second, three audiences can be targeted by sales promotion: consumers, resellers, and the sales force. And third, sales promotion as a competitive weapon provides an extra incentive for the target audience to purchase or support one brand over another. This last factor distinguishes sales promotion from other promotional mix tactics. For example, unplanned purchases may be directly related to one or more sales promotion offers.

In order to understand the basic role and function of sales promotion, one must differentiate between sales promotion and other components of the marketing mix. Sales promotion usually operates on a short timeline, uses a more rational appeal, returns a tangible or real value, fosters an immediate sale, and contributes highly to profitability. The idea of contribution to profitability may be confusing. It is simply the ratio between what is spent on a promotional mix compared to the direct profitability generated by that expenditure. A few exceptions to the above characteristics do exist. For example, a sweepstakes might use a very emotional appeal, while a business-to-business ad may be very rational.

THE STATE OF SALES PROMOTION

Various estimates from the mid-1990s placed annual spending on sales promotion in the United States at $30 billion a year to well over $100 billion, depending on how it is defined. In any case, there is wide consensus that sales promotion enjoyed fairly rapid growth from the 1980s through at least the mid-1990s, rising by more than 10 percent a year for much of the period. There is some evidence that growth slowed after the mid 1990s; promotional spending in the business-to-business arena was being outstripped by advertising spending as of 1997, a reversal from the trend just two years earlier. Still, the steep growth of media costs for traditional advertising has offered an ongoing incentive for marketers to use sales promotions.

Several factors contribute to the strength of sales promotion in the United States. First, consumers have accepted sales promotion as part of buying-decision criteria. Primarily, sales promotion offers consumers the opportunity to get more than they thought possible. Product sampling, for example, allows consumers to try the product without buying it. Furthermore, many people are reluctant decision makers who need some incentive to make choices. Sales promotion gives them the extra nudge they need in order to become active customers. Finally, sales promotion offers have become an integral part of the buying process, and consumers have learned to expect them.

The progression of sales promotion has been spurred by business, especially big business. Top managers and product managers have played direct roles in encouraging the recent growth of sales promotion. The product manager's goals and desires have provided the initial impetus. Product managers are challenged to differentiate their product in a meaningful way from competitors' products because buyers have many choices among brands and products offering similar satisfactions. Sales promotion techniques provide solutions to this dilemma. Heads of companies today focus increasingly on short-term results. They want sales tomorrow, not next quarter or next year. Sales promotions can provide immediate hikes in sales.

New technology, especially the computer, has also created greater acceptance of sales promotion by managers wanting to measure results. For example, scanning equipment in retail stores enables manufacturers to get rapid feedback on the results of promotions. Redemption rates for coupons or figures on sales volume can be obtained within days.

The growth in power of retailers has also boosted the use of sales promotion. Historically, the manufacturer had the power in the channel of distribution. Mass marketers utilized national advertising to get directly to consumers, creating a demand for the heavily advertised brands which stores couldn't ignore. With consolidation, retailers have gained access to sophisticated information. For example, use of computers and bar codes on packages is shifting the balance of power in their favor. Custom designed programs will help retailers to complete and increase sales in their market area. Sales promotion is an effective and satisfying response to the demand for account-specific marketing programs. Increased sales volume provided through sales promotion enhances small profit margins. Retailers also benefit from the immediate feedback of sales promotion that readily reveals unsuccessful programs.

LIMITATIONS

Although sales promotion is a competent strategy for producing quick, short-term, positive results, it is not a cure for a bad product, poor advertising, or an inferior sales team. After a consumer uses a coupon for the initial purchase of a product, the product must then take over.

Sales promotion activities may bring several negative consequences, primarily clutter from increased competitive promotions. New approaches are promptly cloned by competitors, with efforts to be more creative, more attention grabbing, or more effective in attracting the attention of consumers and the trade.

Another increasingly perceived drawback occurs with distributed manufacturers' coupons, such as those inserted in Sunday newspapers. While ideally these are offered as an incentive for new or occasional customers to try the product in hopes of making them regular buyers, research has suggested that most coupons are redeemed by individuals who would normally buy the products anyway. In effect, the manufacturers are subsidizing their existing sales, as only a relatively narrow segment of the consumer market actively uses clipped coupons from the newspapers. To address this problem, manufacturers have found that in-store coupon devices or displays reach a wider cross-section of buyers and are more likely to entice targeted customers (in addition to the regular customers who will likely also use the coupons).

Also, consumers and resellers have learned how to milk the sales promotion game. Notably, consumers may wait to buy certain items knowing that eventually prices will be reduced. Resellers, having learned this strategy long ago, are experts at negotiating deals and manipulating competitors against one another, so that, for example, one company's product may be on sale one week and its competitor's the following week. Value-minded consumers then can regularly find an equivalent product on sale, which may increase their loyalty to the store at the cost of the manufacturers.

TECHNIQUES OF CONSUMER
PROMOTIONS

Consumer sales promotions are steered toward the ultimate product users—typically individuals—especially shoppers in the local supermarket. Some of the same general techniques may be used to promote business-to business sales, although they tend to be implemented in different ways given the contrasts between the consumer and the corporate markets. In addition, trade sales promotions target resellers—wholesalers and retailers—who carry the marketer's product. Following are some of the key techniques in the storehouse of varied consumer-oriented sales promotions.

PRICE DEALS

A consumer price deal saves the buyer money when a product is purchased. The price deal hopes to encourage trial use of a new product or line extension, to recruit new buyers for a mature product, or to reinforce existing customers' continuing their purchasing, increasing their purchases, accelerating their use, or purchasing of multiple units of an existing brand. Price deals work most effectively when price is the consumer's foremost criterion or when brand loyalty is low. Four main types of consumer price deals are used: price discounts, price pack deals, refunds or rebates , and coupons .

PRICE DISCOUNTS.

Buyers learn about price discounts and cents-off deals either at the point of sale or through advertising. At the point of sale, price reductions may be posted on the package or signs near the product or in storefront windows. Ads that notify consumers of upcoming discounts includes fliers, newspaper and television ads, and other media. Price discounts are especially common in the food industry, where local supermarkets run weekly specials.

Price discounts may be initiated by the manufacturer, the retailer, or the distributor. For instance, a manufacturer may "pre-price" a product and then convince the retailer to participate in this short term discount through extra incentives. Effectiveness of national price reduction strategies requires the support of all distributors. When such support is lacking, consumers may find that the manufacturer's price is covered by the retailer's price, bearing witness to the power of retailers.

Existing customers perceive discounts as rewards and often then buy in larger quantities. Price discounts alone, however, usually don't induce first time buyers. Other appeals must be available, such as mass media ad exposure or product sampling.

PRICE PACK DEALS.

A price pack deal may be either a bonus pack or a banded pack. When a bonus pack is offered, an extra amount of the product is free when the product is bought at the regular price. This technique is routinely used for cleaning products, food, and health and beauty aids to introduce a new or larger size. A bonus pack rewards present users but may have little appeal to users of competitive brands. It is also a way to "load" customers up with the product.

When two or more units of a product are sold at a reduction of the regular single-unit price, a banded pack offer is being made. Sometimes the products are physically banded together, such as in toothbrush and toothpaste offers. More often, the products are simply offered in a two-for, three for, or ten-for format. In other cases, a smaller unit of the product may be attached to one of the regular size.

REFUNDS AND REBATES.

A refund or rebate promotion is an offer by a marketer to return a certain amount of money when the product is purchased alone or in combination with other products. Refunds aim to increase the quantity or frequency of purchase, to encourage customers to load up. This dampens competition by temporarily taking consumers out of the market, stimulates purchase of postponable goods such as major appliances, and creates on-shelf excitement or encourages special displays. Consumers seem to view refunds and rebates as a reward for purchase. They appear to build brand loyalty rather than diminish it.

COUPONS.

Coupons are legal certificates offered by manufacturers and retailers. They grant specified savings on selected products when presented for redemption at the point of purchase. Manufacturers sustain the cost of advertising and distributing their coupons, redeeming their face values, and paying retailers a handling fee. Retailers who offer double or triple the amount of the coupon shoulder the extra cost. Retailers who offer their own coupons incur the total cost, including paying the face value. Retail coupons are equivalent to a cents-off deal. In 1859, Grape-Nuts cereal created this promotional technique by offering a $.01 coupon.

Manufacturers disseminate coupons in many ways. They may direct deliver by mailing, dropping door to door, or delivering to a central location such as a shopping mall. They may distribute them through the media—magazines, newspapers, Sunday supplements, or freestanding inserts (FSI) in newspapers. They may insert a coupon into a package, attach it to, or print it on a package. Coupons may also be distributed by a retailer who uses them to generate store traffic or to tie in with a manufacturer's promotional tactic. Retailer-sponsored coupons are typically distributed through print advertising or at the point of sale. Sometimes, specialty retailers such as ice cream or electronics stores or newly opened retailers will distribute coupons door to door or through direct mail.

CONTESTS AND SWEEPSTAKES

Historically, a great deal of confusion about the terms contests and sweepstakes has existed. Simply, a contest requires the entrant, in order to be deemed a winner, to perform a task (for example, draw a picture, write a poem) that is then judged. This is termed a contest of skill. On the other hand, a sweepstakes is a random drawing or chance contest which may or may not have a requirement such as buying a ticket or purchasing a product. A contest requires a judging process; a sweepstakes does not.

The use of sweepstakes has grown dramatically in recent decades, thanks largely to changes in the legal distinctions that determine what is and is not a lottery. A lottery is a promotion that involves the awarding of a prize on the basis of chance with a consideration required for entry. Before these changes, being associated with a lottery carried negative stereotypes of gamblers or organized crime. In a sales promotion, the consideration is the box top or other token asked for by the advertiser. For many years, advertisers employed contests, thus eliminating the element of chance and removing the lottery stigma. The familiar "25 words or less" contest and many other similar devices were common. The liberalization of legal interpretations, including the ability to ask for a sales receipt as proof of purchase, made sweepstakes feasible.

Besides legal changes, concern for costs favored a switch to sweepstakes; in some cases sweepstakes can be cheaper to run than contests. In addition, participation in contests is very low compared to that of sweepstakes. Contests require participants to compete for a prize or prizes based on some sort of skill or ability. Sweepstakes, on the other hand, require only that participants submit their names for a drawing or another type of chance selection. Although the figures are rough, an estimated $87 million was spent on contests and sweepstakes in 1977, and $175 million in 1989.

Nonetheless, according to one estimate fewer than 20 percent of all households have ever entered a contest or sweepstakes. Even worse, some consumers feel conned when sweepstakes make aggressive or overly ambitious claims, such as that a particular individual is very close to winning. In the late 1990s some of the best-known U.S. sweepstakes such as American Family and Publishers Clearinghouse, firms that market magazine subscriptions alongside their much-touted sweepstakes, were under scrutiny by a number of state attorneys general and federal legislators, raising the possibility that new federal legislation would place limits on what sweepstakes could claim and in what manner.

SPECIAL EVENTS

By some estimates companies around the world spent over $15 billion a year as of 1997 to link their products and corporate identities with everything from jazz festivals to golf tournaments to stock car races. In fact, a number of large corporations have special divisions or departments that handle nothing but special events sponsorships. One of the world's largest agencies, Saatchi & Saatchi DFS Compton, has a group called HMG Sports that manages sports events, including the Olympics, a ski tour for Sanka and Post Cereals, bass-fishing contest for Hardee's, and a worldwide yacht-racing event for Beefeater's Gin.

Several good reasons explain why so many marketers have jumped on the special events bandwagon. First, events tend to attract a homogeneous audience very appreciative of the sponsors. Therefore, if a product fits with the event in terms of the expected stereotypical homogeneity of the audience, the impact of the sales promotion dollars will be quite high. To illustrate, Lalique Crystal should not sponsor a tractor pull, but Marlboro should. Second, events sponsorship may build support from trade and from employees. Those employees who manage the event may receive acknowledgment and even awards. Little is more appealing to the president of Kemper Insurance than presenting a $300,000 check to the winner of the Kemper Open on national television. Finally, compared to producing a series of ads, event management is simple. Many elements of events are prepackaged. For example, a firm can use the same group of people to manage many events. It can use booths, displays, premiums, and ads repeatedly by simply changing names, places, and dates.

PREMIUMS

A premium is tangible compensation, an incentive, given for rendering a particular deed, usually buying a product. The premium may be free, or, if not, the cost is well below the usual price. Getting a bonus amount of the product is a premium, as is receiving the prize in a cereal box, a free glass with a purchase of detergent, or a free atlas with a purchase of insurance.

Incentives given free at the time of a purchase are called direct premiums. With such bonuses there is no confusion about costs, returning coupons or box tops, clipping weight circles or bar codes, or saving proofs. Plus there is instant gratification.

Four variants of direct premium programs may be identified. First, the simple direct premium provides an incentive given separately as a product is purchased. For instance, when a shopper pays for a new coat, she learns it has a direct premium—a hanging travel bag. Second, in-packs may be enclosed with a package at the factory. A snack food company, for example, may include a serving tin inside its holiday package. On-packs are another type of factory-added packaging that lies outside the package, well attached by a plastic strip, wrapper, or other apparatus. Free dental floss attached to toothpaste is an example. Fourth, container premiums reverse the presentation of the in-pack by placing the product inside the premium such as fancy liquor decanters which often hold the goods at Christmas.

Other types of direct premium are traffic builders, door-openers, and referral premiums. The traffic-builder premium is an incentive—such as a gift of a small garden tool—to lure a prospective buyer to a store. A door-opener premium is directed to customers at home or business people in their offices. Door-opening favors are a staple device in the direct-sales field. The use of this premium type may create a subtle entry during house-to-house canvassing or a clincher when telephoning for an appointment. Door-openers serve similar functions in many other industries. For example, an electronics manufacturer offers free software to an office manager who agrees to an on-site demonstration. The final category of premiums is the referral provided by the purchaser. Sales leads from satisfied customers are awarded to sellers along with rewards for their assistance.

Mail premiums, unlike direct premiums, require the customer to perform some act in order to obtain a premium through return mail. The self-liquidator is the basic type of mail premium. It was created during the Great Depression of the 1930s, a time of enforced economy. Savings counted to the penny were vital to the ordinary consumer. Since promotion budgets were usually tight, the premium which cost the advertiser nothing was most appealing. The self-liquidator fit the bill. Self-liquidating meant the price the customer paid for the premium was the same as the cost paid by the advertiser. That is, the costs canceled themselves. A self-liquidating premium may be available in exchange for one or more proofs-of-purchase and a payment or charge covering the cost of the item plus handling, mailing, packaging, and taxes, if any. The premium represents a bargain because the customer cannot readily buy the item for the same amount.

CONTINUITY PROGRAMS

Continuity programs retain brand users over a long period by offering ongoing motivations; in this sense, long-term continuity programs differ somewhat from most other forms of sales promotions since they are relatively permanent. Self-liquidating premiums are one-time opportunities, whereas continuity programs demand that consumers keep saving something in order to get the premium in the future. Trading stamps, popularized in the 1950s and 1960s, such as S&H and Gold Bond, are prime examples. The bonus was usually one stamp for every dime spent at a participating store. The stamp company provided redemption centers where the stamps were traded for merchandise. A catalog listing the quantity of stamps required for each item was available at the participating store.

Today, airlines' frequent-flyer clubs, hotels' frequent-traveler plans, as well as bonus-paying credit card programs have replaced trading stamps continuity programs. Looking back, it seems that when competing brands have reached parity, continuity programs have provided the discrimination factor among those competitors. Continuity programs have also opposed a new threatening competitor by rewarding long-standing customers for their continuing loyalty. A continuity program is all about sustaining brand loyalty through continuous reward. Retail-driven frequent-shopper plans focus on core customers to solidify store loyalty; manufacturer sponsored programs usually encourage product loading and repeat purchase from stores.

SAMPLING

A sign of a successful marketer is getting the product into the hands of the consumer. Sometimes, particularly when a product is new or is not a market leader, an effective strategy involves giving a sample product to the consumer either free or for a small fee. The first rule is to use sampling only when a product can virtually sell itself. Thus, the product must have benefits or features obvious to the consumer. Also, the consumer must be given enough of the product to enable an accurate judging of its value. Trial sizes of a product dictate how much will be received.

There are several means of disseminating samples to consumers. The most popular has been through the mail. Increases in postage costs and packaging and bundling requirements, however, have made this method less attractive. An alternative is door-to-door distribution, particularly when the items are bulky and/or when reputable distribution organizations exist. The product may simply be hung on the doorknob or delivered face to face. This method permits selective sampling of neighborhoods, dwellings, or even people.

Another method is distributing samples in conjunction with advertising. An ad may include a coupon that the consumer can mail in for the product, or an address or phone number for ordering may be mentioned in the body of an ad. Direct sampling is achieved through prime media using scratch 'n'-sniff cards and slim foil pouches.

Products can also be sampled directly through the retailer who sets up a display unit near the product or hires a person to give the product to consumers as they pass by. This technique may build goodwill for the retailer and be effective in reaching the right consumers. Some retailers resent the inconvenience and require high payments for their cooperation.

The last form of distribution deals with specialty types of sampling. For instance, some companies specialize in packing samples together for delivery to a homogeneous consumer group such as newlyweds, new parents, students, or tourists. Such packages may be delivered at hospitals, hotels, or dormitories.

TRADE PROMOTIONS

A trade sales promotion is pointed toward resellers who distribute products to ultimate consumers. The term "trade" traditionally refers to wholesalers and retailers who handle or distribute marketers' products. Other terms for wholesalers and retailers include "resellers" and "dealers."

Commonly, a senior marketing officer or product manager is responsible for planning a trade promotion. Decisions about the nature of the deal and its timing are made jointly by the marketing officer, sales manager, and campaign manager. Because such deals have direct bearing on the pricing strategy and resulting profitability, they may require clearance by top management as well.

The objectives of sales promotions aimed at the trade are different from those directed to consumers. Trade sales promotions hope to accomplish four overall goals:

  1. Develop in-store merchandising support or other trade support. Strong retail support at the store level is the key to closing the loop between the customer and the sale.
  2. Control inventory. Sales promotions are used to increase or deplete inventory levels and to eliminate seasonal peaks and valleys.
  3. Expand or improve distribution. Sales promotions can open up new areas or classes.
  4. Motivate channel members. Sales promotions can generate excitement about the product among those responsible for selling it.

TYPES OF TRADE SALES PROMOTIONS

POP DISPLAYS.

Manufacturers provide point-of-purchase (POP) display units free to retailers in order to promote a particular brand or group of products. The forms of POP displays include special racks, display cartons, banners, signs, price cards, and mechanical product dispensers. Probably the most effective way to ensure that a reseller will use a POP display is to design it to generate sales for the retailer.

High product visibility is the basic goal of POP displays. In industries such as the grocery field where a shopper spends about three-tenths of a second viewing a product, anything increasing product visibility is valuable. Beyond getting attention for a product, POP displays also provide or remind about important information such as the product name, appearance of the product, and sizes. Consumers may have seen or heard some of the information in ads before entering the store. The theme of the POP should be coordinated with the theme used in ads and by salespeople.

SALES CONTESTS.

For salespeople, sales contests can be an effective motivation. Typically, a prize is awarded to the organization or person who exceeds a quota by the largest percentage. For example, Cepacol Mouthwash offered supermarket managers cash prizes matched to the percentages by which they exceeded the sales quota, plus a vacation to Bermuda for the manager who achieved the highest percentage. Often such programs must be customized for particular reseller groups.

TRADE SHOWS.

Thousands of manufacturers display their wares and take orders at trade shows. In the United States companies were spending some $13 billion each year on trade shows as of the late 1990s. For many companies, maximum planning effort and much of the marketing budget are directed at the trade show. Success for an entire year may hinge on how well a company performs there.

Trade shows provide unique opportunities. First, trade shows provide a major opportunity to write orders for products. Second, they are a chance to demonstrate products, provide information, answer questions, and be compared directly with competitors. Since typically at least several direct competitors will be pitching their products to potential customers under the same roof, buyers have the opportunity to quickly judge quality, features, prices, and technology at these events. Similarly, such events also provide sellers with a chance to size up the competition and fortify their competitive intelligence .

SALES MEETINGS.

Related to trade shows but less elaborate are sales meetings sponsored by manufacturers or wholesalers. Whereas trade shows are open to potential customers, sales meetings are targeted to the company sales force and/or independent sales agents. These meetings are usually conducted regionally and directed by sales managers and their field force. Sometimes a major marketing officer from corporate headquarters directs the proceedings. The purposes of sales meetings vary. The meetings may occur just prior to the buying season and are used to motivate sales agents, to explain the product or the promotional campaign, or simply to answer questions.

PUSH MONEY.

An extra payment given to salespeople for meeting a specified sales goal is called push money; it is also known as spiffs or PM. For example, a manufacturer of refrigerators might pay a $30 bonus for sales of model A, a $25 bonus for model B, and a $20 bonus for model C between March 1 and September 1. At the end of that period, the salesperson would send evidence of these sales to the manufacturer and receive a check in return. Although push money has a negative image since it hints of bribery, many manufacturers offer it.

DEAL LOADERS.

A deal loader is a premium given by a manufacturer to a retailer for ordering a certain quantity of product. Two types of deal loaders are most typical. The first is a buying loader which typically is a gift given for making a specified order size. The second is a display loader which means the display is given to the retailer after the campaign. For instance, General Electric may have a display containing appliances as part of a special program. When the program is over, the retailer receives all the appliances on the display if a specified order size was achieved. Trade deals are often special price concessions superseding, for a limited time, the normal purchasing discounts given to the trade. Trade deals include a group of tactics having a common theme—to encourage sellers to specially promote a product. The attention may be generated by special displays, purchase of larger-than-usual amounts, superior in-store locations, or greater advertising effort. In exchange, retailers may receive special allowances, discounts, goods, or money.

TRADE DEALS.

Money spent on trade deals is considerable. In many industries, trade deals are the primary expectation for retail support. There are two main types of trade deals: buying allowances and advertising/display allowances.

A buying allowance is a bonus paid by a manufacturer to a reseller when a certain amount of product is purchased during a specific time. All the reseller has to do is meet the criteria of the deal. The payment may be a check or a reduction on the face value of an invoice. For example, a reseller who purchases ten to 15 cases receives a buying allowance of $6.00 off per case; a purchase of 16 to 20 cases would result in $6.75 off per case, and so forth.

In order to enjoy a buying allowance, some retailers engage in forward buying, a practice very common in grocery retailing. In essence, more merchandise than needed during the deal period is ordered. The extra merchandise is stored to be sold later at regular prices. The savings gained through the buying allowance must be greater than the cost of warehousing and transporting the extra merchandise.

The count and recount technique is an approach used in the buying allowance strategy. It involves a certain amount of money for each unit moved out of the wholesaler's or retailer's warehouse during a specified period.

A buy-back allowance is another type of buying allowance. It immediately follows a previous trade deal and offers a specified bonus for new purchases of the product related to the quantity of purchases from the first deal. The purpose is to motivate repurchase immediately after the first trade deal once the product has depleted warehouse stock.

The slotting allowance is the most controversial form of buying allowance. Slotting allowances are fees retailers charge manufacturers for each space or slot on the shelf or warehouse that new products will occupy. The controversy stems from the fact that in many instances this allowance amounts to little more than paying a bribe to the retailer.

The final type of buying allowance is a free goods allowance. The manufacturer offers a certain amount of product to wholesalers or retailers at no cost if they purchase a stated amount of the same or a different product. The bonus is in the form of free merchandise instead of money. For example, a manufacturer might offer a retailer one free case of merchandise for every 20 purchased.

An advertising allowance is a common method exercised primarily for consumer products. The manufacturer pays the wholesaler or retailer a dividend for advertising the manufacturer's product. The money can only be used to purchase advertising. Controlling this scheme may be difficult. Some resellers may view the advertising allowance as a type of personal bonus and engage in devious behavior such as billing the manufacturer at the much higher national rate rather than at a lower local rate. Therefore, many manufacturers require some verification.

A display allowance is the final form of promotional allowance. Some manufacturers pay retailers to select their display from the many available every week. The payment can be in the form of cash or goods. Retailers must furnish written certification of compliance with the terms of the contract before they are paid. Retailers tend to select displays that are easy to assemble and yield high volume and profits.

SUMMARY

Sales promotion techniques are distinct from most other forms of marketing in that they directly link the strategy and execution of a marketing campaign. They are geared toward creating an immediate boost in sales volume in response to a substantive offer in the promotion (discount, premium, etc.). As opposed to advertising to build brand image or name recognition, sales promotion is nearly always tied directly to the act of buying the product or service in question. As such, sales promotion is considered an efficient and effective vehicle for marketing communications. For consumers, sales promotion provides a direct and often rational motivation to purchase the product or service being promoted.

Given the many forms sales promotions may take, marketers must plan carefully which approach is best for their intended audience and the intended result of the campaign. In some cases this will be guided by precedence in particular industries; for example, soft-drink makers tend to rely on sweepstakes and continuity programs (often fostering accumulation in order to obtain merchandise) rather than bonus sizing or free samples. In this case, odd-sized beverage containers may present logistical troubles, and for established soft drinks, presumably most potential customers already know how they taste. As with any marketing communication, in sales promotions companies must be careful not to violate their brand image with the promotion. A classic example is with luxury or status products. In these categories discounting and even sweepstakes may send mixed messages to customers, as the assumption is usually that being able and willing to pay the full price is an intrinsic component of buying a status product. If the company violates its luxury brand by "cheapening" it (symbolically or economically), the promotion may alienate the established client base. Instead, the luxury marketer may wish to offer as a premium another luxury item or establish a continuity program.

SEE ALSO : Brands and Brand Names ; Marketing ; Merchandising

[ John Burnett ]

FURTHER READING:

Blattberg, Robert C., and Scott Neslin. Sales Promotion: Concepts, Methods, Strategies. New York: Simon & Schuster, 1995. Bunish, Christine. "Sales: Expanded Use of Collateral Material, Catalogs Boosts Sales Promotion." Business Marketing, 1 May 1999.

LaRonca, Frank. "Dismantling the Wall Between Strategy, Execution." Brandweek, 16 December 1996.

Schultx, Don E., William A. Robinson, and Lisa A. Petrison. Sales Promotion Essentials. 3rd ed. Lincolnwood, IL: NTC Business Books, 1998.

Trivedi, Elizabeth, and Gardener Minakshi. "A Communications Framework to Evaluate Sales Promotion Strategies." Journal of Advertising Research, May-June 1998.



Also read article about Sales Promotion from Wikipedia

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Aug 31, 2011 @ 12:12 pm
The bold subjects such as advertising, public relations, and personal selling should be explained more in relation to the company.

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