Learn about different types of sales promotions companies use to get customers to buy their products.
Understand the different types of sales promotions companies use with their business customers.
Understand why sales promotions have become such an integral part of an organizations promotion mix.
Differentiate between push and pull strategies.
Sales promotions are activities that supplement a companys advertising, public relations, and professional selling efforts. They create incentives for customers to buy products more quickly and make larger purchases. Sales promotions are often temporary, but when the economy is weak, sales promotions become even more popular for consumers and are used more frequently by organizations.
Samples, coupons, premiums, contests, and rebates are examples of consumer sales promotions. Do you like free samples? Most people do. A freeallows consumers to try a small amount of a product so that hopefully they will purchase it. The strategy encourages trial and builds awareness. You have probably purchased a product that included a small free sample with itfor example, a small amount of conditioner packaged with your shampoo. Have you ever gone to a store that provided free samples of different food items? Although sampling is an expensive strategy, it is usually very effective for food products. People try the product, and the person providing the sample tells them about the product and mentions any special prices for it.
In many retail grocery stores, coupons are given to consumers with the samples.provide an immediate price reduction off an item. The amount of the coupon is later reimbursed to the retailer by the manufacturer. The retailer gets a handling fee for accepting coupons. When the economy is weak, more consumers cut out coupons and look for special bargains such as double coupons and buy-one-get-one-free (BOGO) coupons. They may also buy more store brands.
Consumers cut out and use more coupons in a weak economy.
Carol Pyles Coupon Pile Stock Pile CC BY 2.0.
While many consumers cut coupons from the inserts in Sunday newspapers, other consumers find coupons online or on their cell phones., including coupon machines placed next to products in stores, encourage consumers to buy a brand or product immediately. When a consumer sees a special display or can get a coupon instantly, manufacturers hope the sales promotion increases sales. Stores may also provide coupons for customers with loyalty cards to encourage them to select particular brands and products.
Mobile marketing and the Internet provide consumers in international markets access to coupons and other promotions. In India, the majority of coupons used are digital, while paper coupons have the largest share in the United States. Over 80 percent of diapers are purchased with coupons; imagine how much easier and less wasteful digital coupons scanned from a mobile phone are for both organizations and consumers.
Other sales promotions may be conducted online and include incentives such as free items, free shipping, coupons, and sweepstakes. For example, many online merchants such as Shoe Station and Zappos offer free shipping and free return shipping to encourage consumers to shop online. Some firms have found that the response they get to their online sales promotions is better than response they get to traditional sales promotions.
Another very popular sales promotion for consumers is a premium. Ais something you get either for free or for a small shipping and handling charge with your proof of purchase (sales receipt or part of package). Remember wanting your favorite cereal because there was a toy in the box? The toy is an example of a premium. Sometimes you might have to mail in a certain number of proofs of purchase to get a premium. The purpose of a premium is to motivate you to buy a product multiple times. What many people dont realize is that when they pay the shipping and handling charges, they may also be paying for the premium.
Contests or sweepstakes also attract a lot of people.are sales promotions people enter or participate in to have a chance to win a prize. The Publishers Clearing House Sweepstakes and the Monopoly Game at McDonalds are both examples. The organization that conducts the sweepstakes or contest hopes you will not only enter its contest but buy some magazines (or more food) when you do.
The Fantanas are back! Watch the video for a contest being conducted by Fanta soft drinks. As with other sales promotion tools, the idea is to get you to buy a product and more specifically to make repeat purchases.
are sales promotions designed to get repeat business. Loyalty programs include things such as frequent flier programs, hotel programs, and shopping cards for grocery stores, drugstores, and restaurants. Sometimes point systems are used in conjunction with loyalty programs. After you accumulate so many miles or points, an organization might provide you with a special incentive such as a free flight, free hotel room, or free sandwich. Many loyalty programs, especially hotels and airlines, have partners to give consumers more ways to accumulate and use miles and points.
are popular with both consumers and the manufacturers that provide them. When you get a rebate, you are refunded part (or all) of the purchase price of a product back after completing a form and sending it to the manufacturer with your proof of purchase. The trick is completing the paperwork on time. Although different types of sales promotions work best for different organizations, rebates are very profitable for companies because many consumers forget or wait too long to send in their rebate forms. Consequently, they do not get any money back. Rebates sound great to consumers until they forget to send it back.
In business-to-business (B2B) marketing, sales promotions are typically called trade promotions because they are targeted to channel members who conduct business or trade with consumers.include trade shows, conventions, event marketing, trade allowances, training, and special incentives given to retailers to market particular products and services, such as extra money, in-store displays, and prizes.
Trade shows are one of the most common types of sales promotions in B2B markets. Ais an event in which firms in a particular industry display and demonstrate their offerings to other organizations they hope will buy them. There are typically many different trade shows in which one organization can participate. Using displays, brochures, and other materials, representatives at trade shows can identify potential customers (prospects), inform customers about new and existing products, and show them products and materials. Representatives can also get feedback from prospects about their companys products and materials and perhaps about competitors.
Companies also gather competitive information at trade shows because they can see the products other firms are exhibiting and how they are selling them. While approximately 75 percent of representatives attending trade shows actually buy the product(s) they see, 93 percent of attendees are influenced by what they see at the trade shows. However, only 20 percent of organizations follow up on leads obtained at trade shows and only 17 percent of buyers are called upon after they express interest in a particular companys products (Tanner Pitta, 2009).Figure 11.13is an example of a booth display at a trade show showcasing the Korean electronics firm Samsung. Trade shows can be very successful, although the companies that participate in them need to follow-up on the leads generated at the shows. With changing technology, Webinars are being used to reach businesses that may not be able to attend trade shows. Follow-up after a Webinar is also essential.
, or meetings, with groups of professionals also provide a way for sellers to show potential customers different products. For example, a medical convention might be a good opportunity to display a new type of medical device. Sales representatives and managers often attend conventions to market their products.
Intuitive Surgical is the maker of the da Vinci robot, a new type of technology used to make surgeries easy to perform and less invasive. Intuitive Surgical often demonstrates the robot at surgical conventions.
Docor Comunicacion Da Vinci robot CC BY-NC-ND 2.0.
, which are often held by manufacturers or vendors, provide incentives for salespeople to increase their sales. Often, the contests focus on selling higher-profit or slow-moving products. The sales representative with the most sales of the product wins a prize such as a free vacation, company recognition, or cash.
give channel partnersfor example, a manufacturers wholesalers, distributors, retailers, and so forthdifferent incentives to push a product. One type of trade allowance is an(money) to advertise a sellers products in local newspapers. An advertising allowance benefits both the manufacturer and the retailer. Typically, the retailer can get a lower rate than manufacturers on advertising in local outlets, saving the manufacturer money. The retailer benefits by getting an allowance from the manufacturer.
Another sales promotion that manufacturers, such as those in the tool or high tech industries, offer businesses isto help their salespeople understand how the manufacturers products work and how consumers can be enticed to buy them. Many manufacturers also provide in-storeto show a channel partners customers how products work and answer any questions they might have. Demonstrations of new video game systems and computers are extremely popular and successful in generating sales.
, such as a tool, television, or other product produced by the manufacturer, can also be used to get retailers to sell products to consumers. In other words, a manufacturer of televisions might offer the manager of a retail electronics store a television to push its products. If a certain number of televisions are sold, the manager gets the television. Have you ever been to an electronics store or a furniture store and felt like the salesperson was pushing one particular television or one particular mattress? Perhaps the salesperson was getting, or a cash incentive from the manufacturer topusha particular item. The push to sell the item might be because there is a large amount of inventory of it, it is being replaced by a new model, or the product is not selling well.Figure 11.15 Examples of Sales Promotionsrecaps the different types of sales promotions designed for both consumers and businesses.
Figure 11.15Examples of Sales Promotions
Businesses must also decide whether to use a push strategy, a pull strategy, or both push and pull strategies. Ainvolves promoting a product to businesses (middlemen), such as wholesalers and retailers, who thenpushthe product through the channel promoting it to final consumers. Manufacturers may set up displays in retail outlets for new products or provide incentives such as price discounts to the retailer so the retailer can promote or push the product to consumers.
Companies use awhen they target final consumers with promotions. In other words, a company promotes it products and services to final consumers topullconsumers into the stores or get the consumers asking for the product. If a company sends coupons to the consumers, hopefully the consumers will take the coupons (sales promotion) to the store and buy the product. A manufacturer promotes its new product on television to consumers and places coupons in the newspaper inserts, hoping consumers will demand the product. Their pull causes wholesalers and retailers to buy the product to try to meet the demand.
Many manufacturers use both a push strategy and a pull strategy, promoting their products and services to both final consumers and their trade partners (e.g., retailers and wholesalers).Figure 11.16 A Push versus a Pull Strategyshows how push strategy differs from a pull strategy.
Figure 11.16A Push versus a Pull Strategy
Companies use sales promotions to get customers to take action (make purchases) quickly. Sales promotions increase the awareness of products, help introduce new products, and often create interest in the organizations that run the promotions. Coupons, contests, samples, and premiums are among the types of sales promotions aimed at consumers. Trade promotions, or promotions aimed at businesses, include trade shows, sales contests, trade allowances, and push money.
What are the objectives of sales promotions?
Identify and provide an example of three sales promotion tools targeted at consumers.
Identify and provide an example of three sales promotion tools targeted at businesses.
Explain the difference between a push strategy and a pull strategy.
Tanner, J. F. Jr., and Dennis Pitta, Identifying and Creating Customer Value (special session presentation, Summer Educators Conference, Chicago, 2009).
This is a derivative ofPrinciples of Marketingby a publisher who has requested that they and the original author not receive attribution, which was originally released and is used under CC BY-NC-SA. This work, unless otherwise expressly stated, is licensed under aCreative Commons Attribution-NonCommercial-ShareAlike 4.0 International License.
1.4 Themes and Organization of This Book
1.5 Discussion Questions and Activities
2.2 Components of the Strategic Planning Process
2.3 Developing Organizational Objectives and Formulating Strategies
2.4 Where Strategic Planning Occurs within Firms
2.5 Strategic Portfolio Planning Approaches
2.6 Discussion Questions and Activities
Chapter 3: Consumer Behavior: How People Make Buying Decisions
3.1 Factors That Influence Consumers Buying Behavior
3.2 Low-Involvement Versus High-Involvement Buying Decisions and the Consumers Decision-Making Process
3.3 Discussion Questions and Activities
Chapter 4: Business Buying Behavior
4.1 The Characteristics of Business-to-Business (B2B) Markets
4.4 Stages in the B2B Buying Process and B2B Buying Situations
4.5 International B2B Markets and E-commerce
4.7 Discussion Questions and Activities
Chapter 5: Market Segmenting, Targeting, and Positioning
5.1 Targeted Marketing versus Mass Marketing
5.3 Selecting Target Markets and Target-Market Strategies
5.4 Positioning and Repositioning Offerings
5.5 Discussion Questions and Activities
6.3 Types of Business-to-Business (B2B) Offerings
6.4 Branding, Labeling, and Packaging
6.6 Discussion Questions and Activities
Chapter 7: Developing and Managing Offerings
7.1 The New Offering Development Process
7.2 Managing New Products: The Product Life Cycle
7.3 Discussion Questions and Activities
Chapter 8: Using Marketing Channels to Create Value for Customers
8.1 Marketing Channels and Channel Partners
8.3 Functions Performed by Channel Partners
8.6 Discussion Questions and Activities
Chapter 9: Using Supply Chains to Create Value for Customers
9.2 Demand Planning and Inventory Control
9.4 Track and Trace Systems and Reverse Logistics
9.5 Discussion Questions and Activities
Chapter 10: Gathering and Using Information: Marketing Research and Market Intelligence
10.2 Steps in the Marketing Research Process
10.3 Discussion Questions and Activities
Chapter 11: Integrated Marketing Communications and the Changing Media Landscape
11.1 Integrated Marketing Communications (IMC)
11.2 The Promotion (Communication) Mix
11.3 Factors Influencing the Promotion Mix, Communication Process, and Message Problems
11.4 Advertising and Direct Marketing
11.8 Discussion Questions and Activities
Chapter 12: Public Relations, Social Media, and Sponsorships
12.1 Public Relations Activities and Tools
12.3 Discussion Questions and Activities
13.1 The Role Professional Salespeople Play
13.2 Customer Relationships and Selling Strategies
13.4 Ethics in Sales and Sales Management
13.5 Integrating Sales and Marketing
13.6 Outsourcing the Sales Function
13.7 Discussion Questions and Activities
Chapter 14: Customer Satisfaction, Loyalty, and Empowerment
14.4 Ethics, Laws, and Customer Empowerment
14.5 Discussion Questions and Activities
Chapter 15: Price, the Only Revenue Generator
15.1 The Pricing Framework and a Firms Pricing Objectives
15.2 Factors That Affect Pricing Decisions
15.4 Discussion Questions and Activities
16.2 Functions of the Marketing Plan
16.4 Ongoing Marketing Planning and Evaluation
16.5 Discussion Questions and Activities
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