Sales Promotion
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.”
An Extra
Incentive to Buy
A Tool to
Speed up Sales
Targeted to
Different Parties
Types of Sales Promotion Activities
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
Event Marketing
Growth of Sales Promotion
100%
90%
80%
70%
60%
Consumer Promotions
Media Advertising
50%
40%
30%
20%
Trade Promotions
10%
0%
'89 ‘90 ‘91 ‘92 '93 '94 '95 '96 '97 '98 '99 ‘00
Percent of Total Promotional Dollars, 3-year Moving Average.
Reasons for the Growth of Sales
Promotion Reaching a Specific Target Audience
Reasons
Strategic Importance of Sales Promotion
Growing Power of Retailers
Declining Brand Loyalty
Increased Promotional Sensitivity
Brand Proliferation
Fragmentation of the Consumer Market
Short-Term Focus
Increased Accountability
Competition
Clutter
Objectives of Consumer Sales
Promotion
To Increase
Consumption of
an Established
Brand
To Obtain Trial
and Purchase
Objectives
To Enhance IMC
Efforts and Build
Brand Equity
To Defend
(Maintain)
Current
Customers
Consumer Sales Promotion Strategy
Decisions

Three categories of strategic decisions
for sales promotion:
1.
2.
3.
Strategic tools/options
Application across product lines
Application in geographic markets
1. Strategic Tools/Options
Franchise Building
Promotional Objectives
Communicate
Distinctive Brand
Attributes
Develop and
Reinforce Brand
Identity
Build Long-term
Brand Preference
Franchise Building
Techniques and Practices
“Frequency”
Programs
Encourage Repeat
Purchase
“Frequency”
Programs
Encourage
Patronage Loyalty
May Improve Oneon-one
Communications
WD-40 Brand Building
Sweepstakes
1. Strategic Tools/Options
Figure 13-2
2. Application Across Product
Lines
Across the entire line or on individual
items?
 If individual items, which ones?

More or less popular?
 Higher or lower price points?
 Regular stock or special version?

3. Application Across Geographic
Markets

Sales promotion  Nationally or in
select markets.
Consumer Sales Promotion Tactical
Decisions
Timing
Execution
Value of
Incentive
Distribution
Sampling
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
Strengths and Limitations of
Sampling
Strengths
Limitations
Induce prospective buyer
to try product or service
Brand must have unique
benefit to induce repeat
purchases
Greater consumer
appreciation of product
benefits
Learning period required
to appreciate brand
requires large sample size
Sampling Methods
Door-to-door Sampling
Methods
Sampling through Media
Sampling through Mail
In-store Sampling
On-product Sampling
Event Sampling
Direct Sampling
Location Sampling
The Internet
Armor All Uses an On-Package
Sample
Coupons
Canadians
use about 8
coupons per person
1/3 of all
Canadians
used coupons in
the past week
in 2003
85% of
Canadians used
coupons last year
Coupons
Over half
of all Canadian
households claim
coupons influence their
brand purchase decisions
Strengths and Limitations of
Coupons
Strengths
Limitations
Appeal to Price Sensitive
Consumer
Difficult to Determine How
Many Consumers Will Use
Coupons and When
Can Offer Price Break
Without Retailers Coop
Coupons Are Often Used
by Loyal Consumers Who
May Purchase Anyway
Can
Can Be Effective Way to
Induce Trial of New or
Existing Products
Declining Redemption
Rates and High Costs of
Couponing
Can Be Way to Defend
Market Share and
Encourage Repurchase
Improper Redemption and
Fraud
Coupon Distribution Across All
Media (2003)
FSI
In-store
In/on package
Magazine
Direct mail
Other
Charity
Data from Figure 13-7
Valpak’s Advertising Helps Enhance
the Value of Coupons
Coupons Are Now Available
Online
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
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 chosen
by random selection from a pool of entries or generation
of a number to match those held by game entrants.
Refunds and Rebates
Refunds: Offers by the manufacturer to
return a portion of the product purchase
price, usually after the consumer
supplies some proof of purchase.
Strengths and Limitations of Refunds and
Rebates
Strengths
Limitations
Create New Users
Delay in Obtaining Refund
Brand Switching or Repeat
Purchases
Effort to Obtain Refund
Temporary Price Reduction
Image of Refunds/Rebates
Slippage
Other Sales Promotion Tools
Bonus Packs
Event
Marketing
Other
Promotional
Tools
Frequency/
Loyalty
Programs
Price-off Deals
Gerber Developed a Sweepstakes in
Conjunction with a Loyalty Program
Bonus Packs

Extra amount of product at regular price
by providing larger containers or extra
units.
Objectives of Trade Sales
Promotion
Maintain Trade
Support for Existing
Products
Obtain Distribution
of New Products
Objectives
Build Retail
Inventories
Encourage Retailers
to Display
Existing Brands
Trade Sales Promotion Strategy Options
Contests and Incentives
Events
Buying
Allowances
Trade Allowances
Point-of-Purchase
Displays
Sales Training Programs
Trade Shows
Cooperative Advertising
Promotional
Allowances
Slotting
Allowances
Chicken of the Sea Targets the
Trade with this Collateral Piece
The Sales Promotion Trap
Figure 13-10