Integrated Marketing Communications by ProfessorBurgerQueen
Sales Promotion Overview and the Role of Trade
Promotion
- Sales promotions are all promotional activities (excluding advertising, public
relations, personal selling, direct marketing, and online marketing/social media) that
stimulate short term behavioural responses from consumers, the trade (i.e.,
distributors, wholesalers, or retailers), and/or the company’s own sales force.
Sales promotion techniques
- Consumer
- Samples
- Coupons
- Bonus packs
- Contests/sweepstakes/games
- Trade
- Buying allowances
- Advertising allowances
- Trade shows
- Sales force
- Contests
- Bonuses
- POP displays
- Slotting allowances – The fees manufacturers of both CPGs and durables pay
retailers for access to a slot or location that the retailer must make available in its
distribution centre.
- Brand-level promotion targets
- Sales force - encourage
- Retailers - push
- Consumers - pull
Developments Underlying the Growth in Promotions
- Shift in balance of power from manufacturers to retailers
- Increased brand parity and price sensitivity
- Reduced brand loyalty
- Splintered mass market and reduced media effectiveness
- Emphasis on short-term results in corporate reward structures
, Integrated Marketing Communications by ProfessorBurgerQueen
A Shift in Accounting Rules
- Promotions expenditures are now treated as reductions in sales revenue instead of
as current expenses
- Under the “new” rules, price-discounting promotions are appropriately treated as
direct reductions from revenue rather than as indirect expense reductions
- This can motivate brand managers to allocate relatively more money into advertising
or into other forms of sales promotions other than price discounts
Function of Sales Promotions
● Stimulate sales force enthusiasm for a new, improved, or mature product
● Invigorate sales of a mature brand
● Facilitate the introduction of new products to the trade
● Increase on- and off-shelf merchandising space
● Neutralize competitive advertising and sales promotions
● Obtain trial purchases from consumers
● Hold current users by encouraging repeat purchases
● Increase product usage by loading consumers
● Preempt competition by loading consumers
● Reinforce advertising
Sales Promotions Cannot:
- Compensate for a poorly trained sales force or a lack of advertising
- Give the trade or consumers any compelling long-term reason to continue purchasing
a brand
- Permanently stop an established brand’s declining sales trend or change the basic
nonacceptance of an undesired product
Problems with Excessive Emphasis on Sales Promotion
1) Can damage image of product
2) Diminish brand loyalty
3) Reduce consumption
Considerations For Sales Promotion Programs
1) Size of the incentive
2) Conditions for participation
3) Distribution vehicle
4) Duration of promotion
5) Timing of promotion
6) Total sales promotion budget
Sales Promotion Overview and the Role of Trade
Promotion
- Sales promotions are all promotional activities (excluding advertising, public
relations, personal selling, direct marketing, and online marketing/social media) that
stimulate short term behavioural responses from consumers, the trade (i.e.,
distributors, wholesalers, or retailers), and/or the company’s own sales force.
Sales promotion techniques
- Consumer
- Samples
- Coupons
- Bonus packs
- Contests/sweepstakes/games
- Trade
- Buying allowances
- Advertising allowances
- Trade shows
- Sales force
- Contests
- Bonuses
- POP displays
- Slotting allowances – The fees manufacturers of both CPGs and durables pay
retailers for access to a slot or location that the retailer must make available in its
distribution centre.
- Brand-level promotion targets
- Sales force - encourage
- Retailers - push
- Consumers - pull
Developments Underlying the Growth in Promotions
- Shift in balance of power from manufacturers to retailers
- Increased brand parity and price sensitivity
- Reduced brand loyalty
- Splintered mass market and reduced media effectiveness
- Emphasis on short-term results in corporate reward structures
, Integrated Marketing Communications by ProfessorBurgerQueen
A Shift in Accounting Rules
- Promotions expenditures are now treated as reductions in sales revenue instead of
as current expenses
- Under the “new” rules, price-discounting promotions are appropriately treated as
direct reductions from revenue rather than as indirect expense reductions
- This can motivate brand managers to allocate relatively more money into advertising
or into other forms of sales promotions other than price discounts
Function of Sales Promotions
● Stimulate sales force enthusiasm for a new, improved, or mature product
● Invigorate sales of a mature brand
● Facilitate the introduction of new products to the trade
● Increase on- and off-shelf merchandising space
● Neutralize competitive advertising and sales promotions
● Obtain trial purchases from consumers
● Hold current users by encouraging repeat purchases
● Increase product usage by loading consumers
● Preempt competition by loading consumers
● Reinforce advertising
Sales Promotions Cannot:
- Compensate for a poorly trained sales force or a lack of advertising
- Give the trade or consumers any compelling long-term reason to continue purchasing
a brand
- Permanently stop an established brand’s declining sales trend or change the basic
nonacceptance of an undesired product
Problems with Excessive Emphasis on Sales Promotion
1) Can damage image of product
2) Diminish brand loyalty
3) Reduce consumption
Considerations For Sales Promotion Programs
1) Size of the incentive
2) Conditions for participation
3) Distribution vehicle
4) Duration of promotion
5) Timing of promotion
6) Total sales promotion budget
