Chapter Six

Sales Promotion
Sales Promotion:
Activity that provides special or short-term incentives to bring about
immediate or fast response from :

o Consumers,
o Distributors,
o Organizations sales force.
Encourages decision to buy.
Increasing the number of existing brand users.
Increase the use of the product
Encouraging the customers to buy the product now.
Identifying attracting new customers.
Introducing new products in the mar!et.
"ales promotion refers to those promotion activities other than advertising, publicity and
personal selling#which stimulates interest, trial, or purchase by the final customers or
others in the channel.
Promotion Strategy
$romotion strategy focuses on the selection of the best promotion activity to meet the
ob%ectives. &here are two basic types of promotion strategy.
1 Pull strategy
! Push Strategy
1 Pull Strategy:

&he organization creates demand by directing promotional efforts at customers or
final users of a product. $ull strategies tend to rely on a mixture of media advertising
and consumer promotion activities. &hese activities cause consumers to search for the
product in stores' by as!ing for the product, they can put pressure on the retailer to
carry it. &he promotion activities considered include coupons, samples, contests, and
premiums.
(. $ush "trategy:
&he organization creates demand for a product by directing promotional efforts at
intermediaries, who in turn promote the product among consumers. $ush strategies
tend to rely on a mixture of personal selling and trade promotion techni)ues to create
demand. &hese trade promotions include a variety of financial incentives referred to
as listing allowances, performances and co#operative advertising allowance.

Pull
*ar!eter + ,holesaler + -etailer + .onsumer

*ar!eter / ,holesaler / -etailer / .onsumer

Push
Sales Promotion "ypes
Sales promotion divided in t#o broad categories:
$1 Consumer promotions

Designed to stimulate purchases by consumers 0ultimate users1
%elp pull the product through the distribution channels
&ocus on achieving trail purchase and repeat multiple purchases and building
brand loyalty.
Ob'ective of Consumer Promotion:
&he most common ob%ective of consumer promotion activity is to have the
consumer ma!e a trial purchase. In the case of a new product, the mar!eter is
concerned that the initial trial and consumer acceptance of the product occur
)uic!ly.
A second ob%ective of consumer promotion activity to protect loyalty by
offering incentives that encourage repeat purchase.
A third ob%ective of consumer promotion activity is to encourage multiple
purchases.
$! "rade promotions:
2esigned to encourage distributors to purchase more additional volume and
provide encouraging merchandise support to stimulate consumer purchase.
%elp push the product through the distribution channels.
Ob'ective of "rade Promotion:
"elling more volume of merchandise
Encouraging merchandise support among channel members
Encouraging channel members to advertise products
Encouraging channel members to give products more shelf space
"ypes of consumer promotion (ctivity
3. .oupons
(. 4ree "amples
5. .ontests
6. .ash -efunds
7. $remium offers
8. 9oyalty 04re)uent#:uyers1 $rograms
;. 2elayed $ayment Incentives
<. .ombination =ffers
1 Coupons
Coupons-)price-off incentives* offered to consumers:
2istributed by the media, electronically, in stores or by the product itself
>ood for trial maintain current users, speed up acceptance of a new product, and
loyalty
$roduct#delivered coupons are good for loyalty+ while others are good for trial
Ob'ectives of coupon programs
?on @ brand users to ma!e trial purchase
*aintain current users
"peed up acceptance of a new product
Encourage current customers to repurchase the brand 0build loyalty1
Attract user of competitive brands
Encourage multiple purchases
Increase sectional sales
,ethods of coupon distribution
Coupons can be delivered to consumers in four different #ays+ by:
$roduct
*edia 0newspaper, magazine1
In#store at the point @of#purchase
Electronically
-edemption rate is the number of coupon return as percentage of the
distributed
Product- delivered coupons
-n- pac. self /coupon is redeemable on the next purchase of the same
product
On-pac. self-coupon appears on the bac! and is valid for a future purchase
of same product
-nstantly redeemable coupon is valued when the brand is bought and the
coupon is removed from the pac!age
Cross-ruff is an in @ pac! or unpac! coupon valid for the purchase of
different product
! &ree Samples
&ree product distributed to potential users in a trial or regular si0e+
effective for achieving trial purchase
In#store samples most common, plus:
.ross#"ampling
.o#operative direct mail
Event stamping
"ample pac!s
&ree product distributed to potential users for achieving trial purchase
Cross Sampling @one product carries a sample of another product
Co-operative direct mail- "mall and light "ample in sent in the mailing
envelope by mail
Event sampling @ occurring during an event 0$epsi &aste .hallenge1
Sample Pac.s @ that are distributed to specific target mar!ets
1Contests
Contests are designed and implemented to create temporary
excitement about a product
S#eepsta.es 2 cash prizes, vacations, merchandise give always3
4ames 5 instant Wins (in#pac!age or in#store prizes3
o "uccessful .ontests have significant media advertising support.
6 Cash 7efunds 27ebates3
,oney returned directly to the consumer by the manufacturer after the
purchases has been made
-einforce loyalty and multiple purchases
"lippage commonly occurs
"uccessful refund offers re)uire strong $#=#$ support
8 Premium offers
(n item offered free or at a bargain price to encourage consumers to
buy a specific product -t is usually offered in three #ays
1 ,ail-in offers / send in proofs of purchase and items will be returned by mail
! -95On Pac. / free items appended to or include with the product
1 Coupons offer at P-O-P- distributed by in#store shelf tal!ers
: ;oyalty 2fre<uent-=uyer3 Programs
( fre<uent buyer program offers consumers a bonus+ such as points or
>play money?
.anadian &ire *oney
.lub A at Aellers and :ay
"hoppers 2rug *arts =ptimum .ard
o &he goal is to encourage loyalty through repeat purchases.
@ Delayed Payment -ncentives
Consumer are granted a grace period during #hich he or she pays no
interest or principle for the item purchased
9eons B2ont $ay a .ent EventC
Dome 2epot
4or renovations and households repairs, they offer six month and one #E year
interest @free financing pac!ages
&his gives them a competitive edge over independent contractors who demand payment
when %obs are completed
A Combination offer
&o maximize the effectiveness of a promotion, mar!eters often combine the consumer
promotion techni)ues.
"ypes of trade promotion activity
$ushes the product through the channel
*ar!eter / 2istributors / .onsumers
3. &rade allowance
(. $erformance allowance
5. .o#operative advertising allowance
6. -etail in#Ad coupons
7. 2ealer $remiums
8. .ollateral *aterial
;. 2ealer 2isplay *aterial 0$#=#$1
<. &rade "hows
F. :randed $romotion *erchandise
3. "rade allo#ance-a temporary price reduction to encourage volume purchases
by distributors
(. Performance allo#ance-an additional discount to encourage retailers to
perform a specific merchandise function
5. Co-operative (d (llo#ance-funds allocated by manufacturers to retailers to
pay retail ad costs when promoting a manufactures product
6. 7etail in /(d Coupons# coupon printed in a retailers wee!ly ad either in
run#of#press ad or in supplements inserted into a newspaper.
7. Dealer Premiums#additional incentive offered to a distributor by a
manufacturer to encourage special purchase or additional merchandising support
8. Collateral ,aterial-here sales force provides considerable data in the form of
collateral materials to customers: price lists+ catalogues+ brochures+ pamphlets+
etc
;. Dealer Display ,aterial2P-O-P3-self contained, customer#designed
merchandising units, either permanent or temporary, that display a manufactures
product 2 li.e+ posters+ ad-pads3
A "rade Sho#s# organized by industries and associations are an excellent means
of bringing a product to customers a message.
B =randed Promotion ,erchandise-useful or decorative products featuring
the organizations logo or brand mar! that is distributed to existing customers and
prospects in appreciation for their business and their loyalty.