Download CHAPTER 18 CONSUMER AND TRADE SALES PROMOTION

CHAPTER 18
CONSUMER AND TRADE SALES PROMOTION
TEACHING OBJECTIVES
After studying this chapter, you should be able to:
1. Explain the role and significance of sales promotions in the marketing
communications mix.
2. Understand why sales promotion expenditures account for a significant portion of
many firms’ marketing communications budgets.
3. Discuss the objectives and techniques of consumer sales promotion.
4. Discuss the objectives and techniques of trade sales promotion.
5. Explain the limitations of sales promotion.
6. Realize how deceptive and fraudulent sales promotion victimizes both consumers
and marketers.
OPENING VIGNETTE:
WWW.VALPAK.COM
As the Val-Pak example illustrates, sales promotion is designed to boost sales. Val-Pak uses
sales promotion to reach and service more than 100,000 businesses through 320 field offices.
Val-Pak mails 9 billion coupons annually in its familiar blue envelopes to 50 million
consumers and small businesses. Its customer-advertisers share the cost of the mailing.
In addition, Val-Pak is the leading distributor of on-line coupons. Their Web site allows
consumers to download free coupons from a variety of products and services. These
coupons are redeemable at local businesses across the United States and Canada. They
have also teamed up with Yahoo!, this allows customers to obtain coupons directly from
Yahoo!.
Val-Pak has also partnered with Pricegrabber.com, Dealcatcher.com,
Rebatecatcher.com, and Startsampling.com to offer consumers additional services.
The company is also a leader in cause-related marketing efforts. The company continues to
be a good corporate citizen by donating expertise in printing and brochure production to
benefit the Canadian Cancer Society. They also teamed with several business in Tampa,
Florida to purchase sporting equipment to local youth groups.
Although primarily viewed as a direct-mail company, Val-Pak utilizes all forms of
marketing combinations to grow its business. Public relations, online coupons, direct
marketing, and various other sales promotion activities has helped to position the company
for growth in the next century.
Bearden, Marketing, Fourth Edition
277
1. How does Val-Pak use sales promotion to boost business?
As the Val-Pak example illustrates, sales promotion is designed to boost sales. Val-Pak uses
sales promotion to reach and service more than 100,000 businesses through 320 field offices.
Val-Pak mails 9 billion coupons annually in its familiar blue envelopes to 50 million
consumers and small businesses. Its customer-advertisers share the cost of the mailing.
2. Give two examples of activities that Val-Pak is engaged in to contact mass markets and their
consumers.
Example 1:
Val-Pak has stayed true to its entrepreneurial roots with recent innovations and new activities
such as online coupon service (free to consumers).
Although the company is excited about the potential growth of the online coupon service, the
traditional format (direct mail) will also remain. According to the company, “Some people
will always prefer to receive coupons for new services and specials by mail.” In the future,
the company will give consumers a choice.
Example 2:
The company is also a leader in cause related marketing efforts. For example, the company
supported the Canadian Cancer Society by donating expertise in printing and brochure
production, helping raise $112,000.
CHAPTER OUTLINE
3. ROLE OF SALES PROMOTION (Use Exhibit 18-1 here)
4. THE SIGNIFICANCE OF SALES PROMOTION
A. Sales Promotion Expenditures
1. Consumer factors
2. Impact of technology
3. Increased retail power
III. CONSUMER SALES PROMOTION
A. Objectives of Consumer Promotions (Use Exhibit 18-2 here)
1. Stimulate trial
278
Chapter 18 Consumer and Trade Sales Promotion
2. Increase consumer inventory and consumption
3. Encourage repurchase
4. Neutralize competitive promotions
5. Increase sales of complementary products
6. Stimulate impulse purchasing
7. Allow price flexibility
B. Consumer Sales Promotion Techniques (Use Exhibit 18-3 here)
1. Price deals
a. Cents-off deals
b. Price-pack deals
2. Coupons
a. Most popular sales promotion device
b. Distribution processes
1. Freestanding insert (FSI)
2. On-shelf couponing
3. Checkout dispensers
4. On-line couponing
3. Rebates
a. Functions
1. Economic appeal
2. Deadlines
3. Reduce the perceived risk
4. Increased consumption
Bearden, Marketing, Fourth Edition
279
5. Maintain brand’s original price
6. Build brand loyalty
4. Cross-promotions (Use “Building Customer Equity: Xbox Wins With Cross
Promotion” here)
a. Advantages
1. Relationship with other strong brands
2. Reinforce the image of each
3. Pooled resources
5. Contests, sweepstakes, and games
a. Contest–skills required
b. Sweepstakes–based on chance
c. Games–similar to sweepstakes but last longer
6. Premiums
a. Given free or at a bargain price
b. Intended to improve the product’s image
c. Gain goodwill
d. Broaden customer base
e. Produce quick sales
f. Types
1. In-pack
2. On-pack
3. Mail-in
7. Sampling
a. Mailed to consumer
b. Distributed door-to-door
280
Chapter 18 Consumer and Trade Sales Promotion
c. Trade shows
d. Special events
e. In store
f. Packed with related product
8. Advertising specialties (Use “Being Entrepreneurial” here)
a. Common uses
1. Reinforces other advertising media
2. Produces or fosters high levels of brand recognition
3. Attract interest among target audience
4. Create a positive attitude toward the provider
IV. TRADE SALES PROMOTIONS
A. Objectives of Trade Promotions (Use Exhibit 18-4 here)
1. Gain or maintain distribution
2. Influence resellers to promote the product
3. Influence resellers to offer a price discount
4. Increase reseller inventory
5. Defend against competitors
6. Avoid price reductions
B. Trade Sales Promotion Techniques (Use Exhibit 18-5 here)
1. Trade allowances
a. Types
1. Buying allowance
2. Display allowance
Bearden, Marketing, Fourth Edition
281
3. Advertising allowance
4. Cooperative advertising
2. Dealer loaders
a. Common types
1. Buyer loader
2. Display loader
3. Trade contests
4. Point-of-purchase displays (Use Exhibit 18-6 here)
a. Advantages
b. Disadvantages
5. Trade shows
a. Objectives
b. Using specialty items
6. Training programs
7. Push money
a. Spiffs
b. Incentive to the retail salesperson
V. LIMITATIONS OF SALES PROMOTION
A. Sales Promotion Cannot Reverse a Declining Trend
B. Cannot Stimulate an Inferior Product That Has Been Rejected
C. Sales Promotion Might Weaken a Brand Image
D. Tends to Encourage Competitive Retaliation
E. Short Term Gain at the Expense of Long-Term Profit
VI. ETHICAL AND LEGAL ISSUES IN SALES PROMOTION
282
Chapter 18 Consumer and Trade Sales Promotion
A. Definition
B. Fraud (Use Exhibit 18-7 here)
C. Diverting
D. Global Concerns
1. Legal issues
2. Examples
VII. SUMMARY
UNDERSTANDING MARKETING TERMS AND CONCEPTS
1. Sales promotion: The element of the marketing communications mix that provides extra
value or incentives to consumers, wholesalers, retailers, or other organizational customers to
stimulate product interest, trail, or purchase; media and nonmedia marketing communications
employed for a predetermined, limited time to stimulate trial, increase consumer demand, or
improve product availability.
2. Consumer sales promotion: Sales promotion directed at ultimate users of the product or
service (as opposed to trade sales promotion).
3. Trade sales promotion: Sales promotion directed at retailers, wholesalers, or other business
buyers to help push products through the marketing channel.
4. Price deal: A temporary reduction in the price of a product, in the form of either a cents-off or
a price-pack deal, used to introduce a new brand, convince current users to purchase more, or
encourage new users to try an established brand.
5. Cents-off deals: An offering of a brand at less than the regular price.
6. Price-pack deals: A product that offers consumers something extra through the packaging
itself; for example, a box of cereal with 20 percent more cereal for the regular price.
7. Coupon: A printed certificate giving the bearer a stated price reduction or special value on a
specific product, generally for a specific period of time; especially useful in encouraging newproduct trials; may be distributed in an ad, in a freestanding insert, or on the store shelf.
8. Freestanding insert (FSI): A preprinted ad, usually containing a coupon, placed into a
separate publication, such as a newspaper.
9. On-shelf couponing: Distributing coupons via a dispenser mounted near the manufacturer's
product on a store shelf.
Bearden, Marketing, Fourth Edition
283
10. Checkout dispensers: Coupons distributed in the store through a dispenser located near the
consumer checkout area.
11. Online couponing: Refers to the distribution of coupons on the Internet.
12. Rebate: Cash reimbursement for purchasing a product, in which the buyer must mail a rebate
form, the receipt, and proof of purchase to the manufacturer within a certain time.
13. Cross promotion: The collaboration of two or more firms in a sales promotion, also called a
tie-in.
14. Contest: A sales promotion that offers prizes based on the skill of the contestants.
15. Sweepstakes: A sales promotion that offers prizes based on a chance drawing of participants'
names.
16. Games: A sales promotion that offers prizes like sweepstakes covers a longer time period.
27. Premium: An item given free or at a bargain price to encourage the consumer to buy.
28. Sample: A small size of a product made available to prospective purchasers, usually free, to
demonstrate a product’s value or use and encourage future purchase.
29. Advertising specialty: An item of useful or interesting merchandise given away free and
typically carrying an imprinted name or message; for example, a pen, calendar, or coffee mug.
30. Trade allowances: The amount a manufacturer contributes to a local dealer or retailer’s
advertising expense.
31. Dealer loader: A premium given to a reseller to encourage development of a special display
or product offering.
32. Trade contest: A sales promotion at the reseller level that associates prizes with sales of the
sponsor's product.
33. Point-of-purchase display: A sales promotion, often provided free by the manufacturer to the
retailer, to call customer attention to a featured product.
34. Trade show: A periodic, semipublic event sponsored by trade, professional, and industrial
associations at which suppliers rent booths to display products and provide information to
potential buyers.
35. Push money: What a manufacturer pays to retail salespeople to encourage them to promote
its products over competitive brands or to sell specific products in the manufacturer’s line.
36. Spiffs: Push money, they are what a manufacturer pays to retail salespeople to encourage
them to promote its products over competitive brands.
284
Chapter 18 Consumer and Trade Sales Promotion
37. Forward buying: When distributors or consumers stock up on enough of product at a deal
price to carry them over to the next sale.
38. Pay-for-performance trade promotion: A sales promotion in which retailers are rewarded for
making sales to consumers rather than purchases from manufacturers.
39. Diverting: Secretly purchasing a product where it is less expensive, usually as a result of a
trade promotion, and reselling it in areas where prices are higher.
THINKING ABOUT MARKETING
1. What factors have contributed to significant expenditures in sales promotion?
There are three main factors recognized as contributing to the growth in sales promotion.
Those are consumer, technological, and retail power factors.
Consumer factors: The U.S. population is growing very slowly (1 percent) and as a result,
expansion of markets is slow and competition for existing marketshare is intensifying.
Increasingly, sales promotions are the weapon of choice in this battle for marketshare.
Technological factors: Through technological advancements, marketers have faster access
to increasingly detailed product movement information. This information provides marketers
immediate feedback concerning sales promotion effectiveness. Armed with this information,
marketers have the opportunity to adjust or eliminate the less effective sales promotion
programs.
Increased retail power: As retailers like Wal-Mart gain channel power, their control over
the products they carry increases. Retailers gaining this kind of control often begin stocking
their own private label brands that compete with national brand name products. To compete,
the manufacturers of the national brands are increasing their sales promotions activities.
2. What are the objectives of consumer sales promotion?
The main goal of sales promotion is to influence present or prospective consumers' behavior
in a manner positively affecting the sponsoring organization. To that end, marketers use sales
promotion to accomplish the following objectives:
·
To stimulate product trial.
·
To increase consumer inventory and consumption.
·
To encourage repurchase.
·
To neutralize competitive promotions.
Bearden, Marketing, Fourth Edition
285
·
To increase sales of complementary products.
·
To stimulate impulse purchasing.
·
To allow price flexibility.
3. Define and briefly discuss these consumer sales promotion techniques: price deals, coupons,
rebates, cross-promotions, contests, sweepstakes, games, premiums, sampling, and
advertising specialties.
Price deals: This form of sales promotion is a temporary reduction in the price of a product.
Price deals usually take the form of cents-off deals or price-pack deals and are designed to
stimulate consumers' adoption of new products or adoption of existing products to new
consumers. Unfortunately? if used too often, price deals become an expectation of consumers
who then will not purchase the product at the regular price.
Coupons: Coupons are certificates or other forms of promotional voucher giving the bearer a
stated price reduction or special value on a specific product, generally for a specific period of
time. Coupon use is on the rise in U.S. markets.
Cross-promotions: Also called tie-ins, they are the collaboration of two or more firms in a
sales promotion. When carefully crafted, cross-promotions provide a synergistic effect on the
promotion of each sponsoring organization's products and image.
Contests, sweepstakes, and games: These are each designed to stimulate consumer
involvement with the sponsoring organization or its products. They are defined as follows:
Contests are activities whereby participants use their skills or problem-solving abilities to
qualify for prizes.
Sweepstakes are activities whereby prizes are awarded based on a chance drawing of
participants' names.
Games are similar to sweepstakes, but cover a longer period of time; which encourages
participants to keep playing.
Premiums are items given free or at a bargain price to encourage consumers to buy the
sponsoring organization's products, or to enhance its image. The use of premiums is common
in many industries and has remained fairly constant for some time.
Samples are small-sized versions of a product made available to prospective purchasers,
usually free of charge. Distributed through stores or by mail, the objective is to gain consumer
adoption of the product through risk-free trial.
Advertising specialties are items of useful or interesting merchandise given away free of
charge and typically carrying an imprinted name or message. Firms use advertising specialties
286
Chapter 18 Consumer and Trade Sales Promotion
to strengthen the message presented by other advertising media and to draw consumer interest
toward the sponsoring organization or its products.
4. How do the objectives of trade sales promotion differ from those of consumer sales
promotion?
The principle goal of trade sales promotion, similar to that of consumer sales promotion, is to
influence present or prospective intermediaries' behavior in a manner positively affecting the
sponsoring organization. The main difference between trade and consumer sales promotion is
the magnitude of the promotion and the volume of products involved. Organizations offer
trade sales promotions to a relatively smaller group of "customers"; yet the size of the
promotion and the commitment required by the recipient are usually much greater than
consumer sales promotions.
5. Define and briefly discuss these trade sales promotion techniques: trade allowances, dealer
loaders, trade contests, point-of-purchase displays, trade shows, training programs, and push
money.
Trade allowances are short-term special allowances, discounts, or deals granted to resellers
as an incentive to stock, feature, or in some way participate in the cooperative promotion of a
product. Trade allowances come in many forms including buying, display, and advertising
allowances.
Dealer loaders are premiums given to a reseller to encourage development of a special
display or product offering. The purpose of dealer loaders is to help ensure proper stocking
and display of the sponsoring organization's products.
Trade contests are contests whereby resellers are awarded prizes based on the reseller's sales
of the sponsor's products. To maintain the effectiveness of trade contests, sponsoring
organizations must be careful to not use them too often.
Point-of-purchase displays are designed to increase sales, and are generally used at the retail
level to call customer attention to a featured product. Sponsoring organizations usually
provide these displays to the reseller for free or at low cost.
Trade shows are periodic, semipublic events sponsored by trade, professional, and industrial
associations at which suppliers rent booths to display products and provide information to
potential buyers. Trade shows provide high exposure to a specific target market while
remaining at one location. Organizations use trade shows to promote new and existing
products to current and potential customers, to acquire new leads, to gain competitive
information, enhance image, and even to recruit personnel.
Training programs are used by organizations to enhance the skills of their customers'
personnel. Usually the programs provide training related to the sponsoring organization and
its products.
Push Money, also called a spiff, is what a manufacturer pays to retail salespeople to
encourage them to promote its products over competitive brands. Push money may be an
Bearden, Marketing, Fourth Edition
287
effective motivational tool for getting retail salespeople to sell the sponsoring organization's
products; however, expiration or termination of these promotional programs may have the
opposite effect.
6. How would these parties be affected if consumer and trade sales promotions on grocery
products were banned by law? (a) consumers; (b) retailers; (c) manufacturers with their own
brands.
The purpose of this question is for students to think critically about how sales promotions
affect consumers, retailers, and manufacturers. Students' answers may vary, but should be
logical and well supported.
Consumers: Consumers would no longer be able to purchase some products at discounted
prices. However, because channel members would no longer be foregoing revenue (due to
sales promotions), in general consumers would probably pay slightly less for all their
products. Unfortunately, those consumers who make purchases based on "what's on special,"
would end up paying more on their weekly food bill.
Retailers: Retailers would be forced to find other ways to compete for marketshare. For
example, to attract customers some grocery stores might dramatically improve customer
service.
Manufacturers: Similar to retailers, manufacturers would be forced to find other ways to
compete for retailer marketshare. For example, they might permanently relax credit policies or
minimum purchase requirements.
7. Discuss the issue of deception in sales promotion, and give examples of deceptive sales
promotions.
Deception in sales promotion occurs when the promotion misleads or misdirects consumers
while advancing the interests of the sponsoring organization. For example, some
organizations send out postcards notifying consumers that they have won a prize, and to claim
that prize they must call the provided phone number within 24 hours. Typically, when the
consumer calls the telephone number a sophisticate sale pitch begins, or the consumer simply
falls victim to fraudulent activity (no prize). If the prize is ever actually awarded, it is usually
of poor quality and not worth very much. Other deceptive promotions include "free-trip"
giveaways where the "free" accommodations are of such poor quality that consumers are
forced to pay for upgrades.
8. Discuss the problem of coupon and rebate fraud, and identify several ways unscrupulous
operators could exploit manufacturers through fraud.
Perhaps the biggest problem associated with coupon and rebate fraud is technological
advancement. Today, for under $1,000, just about anyone can purchase the computer
equipment and supplies necessary to produce or reproduce coupons, proofs of purchase, and
so forth. which can then be redeemed. For example, a person could scan a coupon into a
high-end desktop publishing package, clean it up, and then print out as many copies as
288
Chapter 18 Consumer and Trade Sales Promotion
desired. Fortunately for manufacturers, technology such as special inks and water marks are
making it increasingly difficult to commit coupon forgery.
9. Refer to “Building Customer Equity: Xbox Wins with Cross Promotion”. What factors
should a company consider before joining with another company to promote its brand?
You should be targeting somewhat the same market segments, otherwise the effort is misdirected. The products need not be complimentary, although, that would be a big plus. The
images of the product lines should be congruent, again to appeal to the same target markets.
You should be sure that the other party does not somehow let you down and have the crossfeed effect be negative.
10. Refer to “Being Entrepreneurial: Success of Accidental Magic No Accident”. Promotional
products are useful in getting the customer’s attention. Are they useful for building a longerterm relationship?
Specialty advertising items are often used as reminders to consumers in mature markets.
Embossed pens and pencils, note pads, and desk decorations (like tiny clocks) serve to keep a
firm’s name in front of brand loyal customers. It might be an exaggeration to think that a
specialty advertising item actually persuaded a traveler to “Fly The Proud Bird With the
Golden Tail” (Continental Airways), these items are part of a coordinated promotional
campaign consisting of several elements. The overall effect is to reinforce brand loyalty and
encourage repeat purchase behavior.
APPLYING MARKETING SKILLS
1. Consult the Sunday edition of a local newspaper. Identify examples of as many consumer
trade promotion techniques as possible. You may find examples of price deals, coupons,
rebates, cross-promotions, contests, sweepstakes, games, premiums, and even sampling.
Select one example from each category of consumer safes promotion techniques that you have
identified, and try to determine the main objective of the promotion: stimulating trial,
increasing consumer inventory and consumption, encouraging repurchase, neutralizing
competitive promotions, or increasing the sale of complementary products.
The purpose of this exercise is to involve students actively in understanding the relative
differences between the various consumer trade promotions found in print media. Students
may have to look in more than one paper but should find a plethora of examples available.
2. Look again at the Sunday newspaper. Collect a minimum of 10 coupons or other sales
promotion materials intended to stimulate trial of a new product. You may need to review the
paper for a couple of weeks to collect 10 examples. Now, visit local retailers to determine
whether the new products are in stock. the product is in stock, note any other point-ofpurchase materials that encourage a purchase. If the product is not in stock, see if you can find
out why.
Bearden, Marketing, Fourth Edition
289
This exercise encourages students to critically examine consumer trade promotions and then
to determine the validity of those promotions by directly contacting the sponsor. In addition,
students have the opportunity to evaluate how other promotional efforts (e.g., point-ofpurchase displays) combine with the sales promotion material found in the paper to
communicate the advertiser's message. Finally, this exercise may expose students to unethical
promotional programs such as "bait and switch."
3. Assume you are the owner of a small independent bookstore in a large metropolitan area.
You face heavy competition from Amazon.com and large national chains such as Walden
Books and Barnes & Noble. Your clientele is more upscale, educated, and intellectual than
that of your competition. You are attempting to develop a sales promotion program to
encourage your clientele to become loyal customers. Explain how you would choose one or
more consumer sales promotion techniques to accomplish this objective.
The purpose of this exercise is for students to evaluate the relative advantages of various sale
promotion techniques, identifying one or two that fit the scenario described. Students' answer
may vary and should include sound rationale for the method selected. For example: you might
create a preferred readers program, giving free membership to present customers. Membership
provides customers with a 10 percent discount on all purchases and entitles them to periodic
"members only" in-store sales. Finally, you could create sitting areas within the store where
members can sit and read while enjoying free coffee.
USING THE WWW IN MARKETING
INSTRUCTOR’S NOTE: Before assigning these projects, the instructor is advised to visit
the Web site mentioned to ensure the Web address has not changed. In addition, the
instructor will find additional activities on the site. Creative assignments can be derived
from the information found there.
Activity One: As mentioned in the chapter opener, Val-Pak is best known for mailing
coupons to customers. Access the company’s Web site at http://www.valpak.com then
answer these questions.
1. Coupons are available on the Val-Pak Web site. What are the advantages and
disadvantages of distributing coupons as compared with traditional methods such as
distributing them in the newspaper, via direct mail, or in a store?
Students are expected to present a variety of answers to this question. Some issues that might
be used to begin the discussion are listed below.
Advantages:
·
290
No waste.
Chapter 18 Consumer and Trade Sales Promotion
·
Can do coupon shopping at home.
·
Can get multiple issues of preferred coupons.
·
Can target only those coupons that you want.
Disadvantages:
·
Must be able to go online.
·
Must be able to download (have a printer).
·
Must know what you are looking for.
·
Might expose you to junk e-mail or some other follow-up device.
·
Not all your favorite coupons will be there.
·
Goes against the traditional way of getting coupons.
2. Other than coupons, do you see any evidence that Val-Pak uses sales promotion at its Web
site? If not, how could Val-Pak use sales promotion to build awareness and usage of its
services?
Students will generate a variety of answers to this question. Some issues that might be used
to begin the discussion are listed below.
Val-Pak can appeal to dealers, manufacturers, and trade groups to encourage online
couponing. Trade shows might be useful to demonstrate the value of online services.
Consumer focus groups might indicate problems with the method and be used as a
springboard for ideas on how to make consumers more aware of the online services of ValPak. Their mailouts can also be used to stimulate trial of the online services.
Activity Two: Specialty advertising products are often used in sales promotion. One Web
site that can be useful in planning sales promotions is PromoMart, developed on behalf of
the Advertising Specialty Institute.
1. Access the PromoMart site at http://www.promomart.com. Click on the “Promotional Ideas
and Info” icon then the “Idea Stores” icon, to learn about successful campaigns that use
specialty advertising items.
This is a click and learn activity. Students should explore the site and write up their findings
in a short paper for the class.
2. Select three ideas that you think are the best examples of sales promotion, and explain why
you chose them.
Bearden, Marketing, Fourth Edition
291
This is a click and learn activity. Students should explore the site and write up their findings
in a short paper for the class.
MAKING MARKETING DECISIONS
INSTRUCTOR’S NOTE: The following short cases make great class assignments. It is
suggested that the cases be assigned in advance of the class with which they are to be
used. Answers to questions require a careful reading by the students, judgments and
reasoning, and an appreciation of the concepts from the chapter.
Case 18-1
Women on Their Way by Wyndham
1. Explain how Wyndham uses a sales promotion tool. the annual contest, to better define and
meet the needs of its female guests.
Contest entrants are asked to describe how they would improve business travel for women.
Some of the suggestions generated from these entries have been implemented by Wyndham,
and these new services promoted as having been originated by their customers ideas.
2. Wyndham often engages in cross-promotions with airlines and other travel-related companies.
What other cross-promotion opportunities do you see for Wyndham?
Women executives have to travel, so any good or service that is travel related could be crosspromoted; restaurants, luggage, car-rental, etc. As long as they have women’s attention, it
would be possible to promote other products and services purchased mostly be women;
clothing, financial services, cosmetics, etc. As with any cross-promotion, the two products
must be somewhat congruent in their consumer image, should be of interest to the same target
market, and should be free from future embarrassment.
3. What other sales-promotion objectives and tools could you recommend for Wyndham?
They already offer price deals, contests, and cross promotions. There is some possibility that
a rebate program could be instituted to reward customer loyalty, coupons associated with
other merchandise purchases, premiums, and advertising specialties (luggage tags).
4. The results of sales promotion should be measurable. What can Wyndham do to better
measure the sales-promotion aspects of its Women on Their Way program?
Build a tracking system that follows the registrations of customers enrolled in the Women on
Their Way program. How do their use rates compare with non-registered customers? Do
their use rates increase following a specific promotional program? Is their repeat purchase
behavior any different than regular customers? Is their satisfaction rating of their Wyndham
experience different than that of regular customers? Once you know who your customers are,
their preferences, and their buying behavior, you should be able to target them with
relationship opportunities.
292
Chapter 18 Consumer and Trade Sales Promotion
Case 18-2
GlaxoSmith-Kline’s Sales Promotion In India
1. Is the payment of promotional allowances to pharmacists in India justified from an economic
point of view? From a societal point of view?
From an economic perspective, once you start paying spiff money it is hard to stop. Also, if
everybody else is paying spiff money it is hard for one company to stop. On the other hand, if
everybody is paying it, what extra benefit is anyone obtaining? Maybe the one that pays the
most gets a benefit, the rest are just wasting their money. Money doesn’t buy any sort of
loyalty from channel members.
To the extent that doctors and pharmacists are making medical decision on the basis of their
own self interest, there is social harm being done. The patient may not receive the correct
medication. With “thousands” of drug manufacturers, and virtually no regulation, the
pharmaceutical market seems to be in chaos. If paying promotional allowances to doctors and
pharmacists is the best marketing tactic available, the patient is being poorly served. If you
ever go to India you should make it a point not to get sick.
2. What other types of sales promotion could GKS engage in that would not be so controversial?
Seems like the first thing they should do is to get together with the reputable drug houses
serving the market and seek government regulation to ensure that patent rights are observed
and that quality standards are created and enforced. As long as “jungle rules” apply there is
little prospect for market stability.
Professional drug reps that call on doctors and conduct educational programs is a promotional
technique that works well in other markets. Liberal supplies of free (to the patient) samples
also is a way to test a patient’s tolerance for a new medication.
Students may have many creative ideas. Just remember that there are cultural issues to need
to be considered.
3. Are industry leaders such as GKS under any obligation to set the standards for ethical sales
promotion practices?
Size and success carry the obligation of leadership. Of course, there is nothing written or
binding, but the public will certainly notice. Students may have a broad range of ideas
concerning just how GKS, or any other industry leader, might fulfill their public service
obligations through leadership in ethical behavior.
Bearden, Marketing, Fourth Edition
293
294
Chapter 18 Consumer and Trade Sales Promotion