Sales Promotion

Sales Promotion

sales promotion An increasingly important communication tool is sales promotion. This pro­ Short­term incentives to

motional vehicle has traditionally been labelled the 'poor relation' of advertising. encourage purchase or

Advertising assumed significance because there was greater scope for advertising sales of a product or

agencies to differentiate brands through creative campaigns, which also helped to service.

enhance their organization's profile. However, a number of pressures have fuelled the recent growth in emphasis on sales promotions. Sales promotion consists of

short­term incentives, in addition to the basic benefits offered by the product or service, to encourage purchase or sales of that product or service. Whereas adver­ tising offers reasons to buy a product or service, sales promotion offers reasons that would achieve immediate sales. It seeks to motivate the customer to buvnoto.

Safes Promotion 819

Table 19.5

Sales promotion (ools

TARGETS VEHICLES Sales force Coupons Competitions * Points system with

Vouchers Free samples/gifts gift catalogue Commissions Bonus scheme Club for high achievers

Consumer Demonstrations Events Reduced­price pack Competitions Club for repeat buyers Extra­value pack Sweepstake Money­back guarantees Coupon Premiums: Joint promotion: Voucher with cash

Free with pack Complimentary product value Free on­pack with charity Banded pack Free mail­in • Samples Collector series

Trade or • Credit/extended credit • Competitions Self­liquidating retailer • Free services • Free samples Trade­in offers

• Training • Discount on bulk Sale or return • Club for special purchases Loyalty bonuses

customers • Discount for early payment Range bonuses Reciprocal buying

Sales promotion includes a wide variety of promotion tools designed to stimulate consumer promotion earlier or stronger market response. It can be targeted at three levels within the distri­

Sales promotion bution chain ­ the consumer, the trade or retailer and the company's sales force.

designed to stimulate Consumer promotions include money­off, coupons, premiums, contests and

consumer purchasi ng. others. Trade promotions range from special discounts, free goods and loyalty

including samples, bonuses to training. Sales force promotions include bonuses, commissions, free

coupons, rebates, prices­ gifts and competitions. Table 19.5 lists the array of sales promotion vehicles that

o/f, premiums, patronage apply to each type of sales promotion target.

rewards, displays, and contests and sweepstakes.

Reasons for Growth of Sales Promotion

trade (or retailer) promotion

There are several reasons for the recent rapid growth of sales promotion, particu­ Sales promotion designed larly in consumer markets:

to gain reseller support and to improve reseller

• Sales promotion is increasingly accepted by top management as an effective selling efforts, including sales tool. More product managers are using sales promotion tools to support

discounts, allowances, free goods, co­operative

their brands, in the face of mounting pressures to increase current sales. In atlvenising, push, money, mature markets, manufacturers are striving to maintain market share

and conventions and through a balance between longer­term 'share­of­voice' gained from

trade shows. advertising and shorter­term incentives for the consumer.

• The company faces more competition, and competing brands are less sales force promotion differentiated. Competitors are using more and more promotions, and

Sales promotion consumers have become more deal­prone.

designed to motivate the sales force and make

• Advertising efficiency has declined because of rising costs, media clutter and sales force selling efforts legal restraints. Sales promotion used in conjunction with other

more effective, including communications, such as direct mail, can offer a more cost­effective route

bonuses, contests and to reach target consumers.

sales rallies.

820 • Chapter J 9 Mass Communications: Advertising, Salus Promotion and Public Relations

• Retailers are demanding more deals from manufacturers. • More agencies are aware of rcecnt manufacturer pressure. They want to

become involved in this fast­growing sector because sales promotion is an area offering opportunities tor creativity and revenue.

• Developments in information technology, the reduction in data storage and retrieval costs, and the increased sophistication of targeting techniques have facilitated implementation and enabled more effective measurement and control of sales promotion efforts.

The growing use of sales promotion has resulted in promotion clutter, similar

10 advertising clutter. Consumers who are continually bombarded with pro­ motions are increasingly tuning out' promotions, weakening their ability to trigger immediate purchase. Many sales promotions fail to create excitement among promotion­prone consumers. To capture the attention and interest of customers, manufacturers are now searching for ways to rise above the clutter, such as offering larger coupon values, creating more dramatic point­of­purehase displays or developing more creative campaigns that stand out from the crowd.