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Sales Promotions
Objective: Introducing sales promotions for tourism and
hospitality. In the end of this week, students will understand
how sales promotions work and various methods of sales
promotions available for tourism and hospitality.
Sales Promotions
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Are short-term incentives to encourage to
purchase or sale of a product or service.
Include a variety of tools designed to simulate
market response.
Ratio in the overall marketing expenditures
increased in recent years. Often account for 60 –
70% of the marketing expenditures.
Most effective when used with advertising or
personal selling.
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Many promotional messages are delivered
through advertising.
However, there is a major difference between
sales promotions and advertising.
Advertising is used to increase sales with the
help of a specific promotion available for a
limited time and increase brand awareness at the
same time.
Sales promotions are used with other
communications to raise awareness of the brand
or the product, to launch a new product.
How Sales Promotions Work
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Must provide an incentive often in the form of
a price discount, reward or upgrade.
Since they are short-term, consumers must act
quickly to take advantage.
Delivered in a communication message; in this
way, awareness is raised, interest is created and
sales are increased.
Can be targeted towards customers or members
of staff or agents in the distribution network.
Advantages
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generating immediate purchase in a large extent
ability to provide quick feedback
ability to add excitement to a service or product
flexible timing
efficiency
Disadvantages
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short-term benefits
ineffective in building long-term loyalty for
company or “brand”
inability to be used on its own in the long term
without other promotional mix elements
often misused for just short-term benefits
Profiles of Major Sales Promotions
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Consumer-Promotion Tools
Couponing: attract potential guests with a special
offer such as a free night’s lodging after a special
number of credits. They can be given out
personally, included in direct mail advertising or
printed in newspapers and magazines. They can
increase off-season business with other sales
promotions such as bonus offers or discounting.
 Product Sampling: introduces new products to
the guests, some are free, most effective to
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introduce a product but most expensive as well,
determines whether guests like a new product
and encourages them to order the item.
 Contests: give consumers a chance to win
something such as cash, trips, goods by luck or
through extra effort, can increase sales, should be
cost effective - increased sales should offset the
cost of contest promotions and prizes. E.g.
Coca-Cola New Year’s prize (a BMW) will be one
of the customers who sent the correct amount
of Coca-Cola lid.
 Packages: offer consumers savings off the regular
price of a product, have discount price to attract
new guests and increase sales. E.g. a
holiday package including lodging, transportation,
and food and beverage with a
reasonable
price.
 Premiums: they are given to guests who pay the
regular prices for certain products or services.
E.g. an upgraded room might be provided or free
movie tickets for the restaurant guests. Pizza
Hut’s free drinks when a large pizza is ordered.
Or when a customer buys one shampoo, he gets
the third one free.
 Gifts or Gift Certificates: free gifts or cash offers,
are used by chains or exclusive properties to
increase sales. E.g. key chains, T-Shirts…
Discounting: straight reduction from the list price
of a product during a stated period of time, are
used to attract more guests and increase total
sales. E.g. one dinner on the menu might be
reduced to 50%. Benetton reduces its prices by
20% during the low season.
 Bonus Offers: the consumer buys a product or
service at the regular price and then receives a
bonus, generally directed to the regular users, E.g.
guest buys three dinners at a regular price and the
fourth one becomes free. Or when the customer
uses his credit card, each time he gets credits, and
when he reaches a certain credit
point, he is entitled to get free gifts such as
toasters, hair dryers...
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Trade-Promotion Tools
Discounting: straight reduction from the list price
on purchases during a stated period of time,
encourages dealers to buy in quantity or to carry
a new item; dealers can use the discount for
immediate profit, for advertising, or for price
reductions to their customers.
 Allowance: promotional money paid by
manufacturers to retailers who agree to help
promote the manufacturer’s products in some
way. E.g. an advertising allowance compensates
retailers for advertising the
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product. A display allowance compensates them
for using special displays.
 Free goods or push money: cash or gifts to
dealers or their sales force to “push” the
manufacturer’s goods.
 Specialty advertising items: they carry the
company’s name, such as pens, pencils, calendars,
paperweights, memo pads, ashtrays...
Steps in Using Sales Promotions
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Setting objectives
Selecting the right tools
Developing the best program
Pretesting and implementing it
Evaluating the results
Setting sales promotion objectives
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Consumer promotions can be used to;
increase short-term sales
 help build long-term market share
 encourage consumers to try a new product
 lure consumers away from competitors
 hold or reward loyal customers
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Trade (sales force) promotions can be used to;
build stronger customer relations
 obtain new accounts
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Selecting sales promotion tools
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Considering the type of market, the sales
promotion objectives, the competition, the costs
and effectiveness of each tool, managers choose
one or more of the sales promotions tools
outlined before.
Developing the sales promotion
program
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At this stage, managers need to define the full
sales promotion program. This requires them to
decide;
on the size of the incentive; they must also set
conditions, incentives can be offered to everyone or
selected groups.
 how to promote and distribute the promotion
program (e.g. coupons can be distribute by mail)
 on the sales-promotion budget
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Pretesting and implementing the
plan
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Sales promotion tolls should be pretested to
determine whether they are appropriate and of
the right size.
However, most companies do not pretest their
sales promotions.
Researchers can ask consumers to rate or rank
different promotions. They can also be tested in
a limited area.
Evaluating the results
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Many evaluation methods are available. Most
common includes sales comparisons before,
during and after a promotion.
Research also can show who responded to the
promotion, their postpromotion buying behavior,
how many recall the promotion, what they
thought of it, how many accepted it, how it
affected their buying patterns.
Unfortunately, most companies do not evaluate
their promotions.
Creative ideas from the industry
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The Ritz-Carlton, Powerscourt, Ireland;
“Enliven the Senses”;
puts together a two-night getaway package that
create value for the guests and receive more per
night from them.
 included two nights deluxe accommodation,
breakfast, dinner for two at the upscale restaurant,
one-hour aromatherapy massage.
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Four Seasons Hotel Cairo; “The Best of
France”;
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Their French Chef created dishes from his home
country Provence, two-weeks event included dining
at the upscale restaurant of the hotel with French
music, flowers and art along with oyster and
champagne bar to provide the perfect ambience.
Sources
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McCabe, S. (2009). Marketing Communications in
Tourism and Hospitality: Concepts, Strategies and Cases.
Butterworth-Heinemann: Oxford.
Kotler, P.; Bowen, J. and Makens, J. (1999). Marketing for
Hospitality and Tourism (2nd ed.). Prentice Hall: New
Jersey.
Kotler, P.; Bowen, J. and Makens, J. (2010). Marketing for
Hospitality and Tourism (5th ed.). Prentice Hall: New
Jersey.
Kotler, P. and Armstrong, G. (2010) Principles of
Marketing (13th ed.). Prentice Hall: New Jersey.