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Sales Promotion, Events,
and Sponsorships
Part 5: Principles: How to Win the Battle of the
Buzz
Chapter 16
Prentice Hall, © 2009
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CHAPTER KEY POINTS
Questions We’ll Answer
• Which principles drive the use of sales promotion
and what are some current trends?
• How are various consumer promotions used?
• What are the types and purposes of trade
promotions?
• How do other types of promotions—sponsorships
and events, interactive promotions, loyalty
programs, and co-marketing programs—work?
• How are promotions used strategically in
marketing in terms of brand building, new product
launches, integration, and effectiveness?
Prentice Hall, © 2009
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THE PRACTICE OF SALES PROMOTION
What is sales promotion?
• When a marketer increases the value of its
product or brand by offering an extra incentive
to purchase it.
• Designed to encourage action.
• AMA: “The media and non-media marketing
pressure applied for a predetermined, limited
period of time at the level of consumer, retailer,
or wholesaler in order to stimulate trial, increase
consumer demand, or improve product
availability.”
• Sales promotion is primarily designed to
motivate people to act by offering incentives.
Prentice Hall, © 2009
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THE PRACTICE OF SALES PROMOTION
Changes in the Industry
• In the past, advertising had dominated
marketing spending.
• Today, more than 2/3 of all firms plan
promotions as part of their strategy.
• Global incentive programs have increased
dramatically; online promotions are
growing at a rate of about 27% annually.
Prentice Hall, © 2009
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THE PRACTICE OF SALES PROMOTION
Reasons for Growth
• Pressure for short-term profits
– Rising cost of mass (traditional) media
• Need for accountability
– Sales promotions are easy to track and evaluate
• Escalation of traditional media costs
– Promotions cost less and deliver tangible results
• Easier and quicker to determine if objectives have
been met
– Usually, there’s an immediate response
• For consumer, risk is reduced
– Added value from coupons, rebates, discounts
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THE PRACTICE OF SALES PROMOTION
Growth from Marketplace Changes
• Consumer behavior
– Shoppers switch more easily
• Pricing
– Consumers expect coupons, sales, discounting
• Market share
– Increased switching leads to increased market share
• Parity products
– Promotions can distinguish between similar products
• Power of the retailer
– Wal-Mart, Home Depot, Toys “R” Us and others
demand promotional incentives
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THE PRACTICE OF SALES PROMOTION
Categories of Sales Promotion
• Consumer
– Targeted to consumer: people like you and me
• Trade
– Targeted to people/companies in the distribution
channel such as buyers, brokers, distributors,
wholesales, dealers, franchisees, retailers, etc.
• Sales Force
– Directed at the firm’s salespeople to motivate
them to increase their sales including training,
sales presentations, support materials,
incentives, performance bonuses, contests
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CONSUMER PROMOTIONS
Types of Consumer Promotions
• Price Deals—temporary price reduction or
sale price
– Cents-off deal
– Price-pack deals (something extra; prize in
cereal box)
– Bonus packs (25% more lotion)
– Banded packs (toothpaste and brush)
• Coupon — discount on the price of the
product
– Retailer: redeemable only at their outlet
– Manufacturer: at any outlet carrying the product
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CONSUMER PROMOTIONS
Types of Consumer Promotions
• Refunds and Rebates
– Marketers offer to return a certain amount of
money to the consumer who purchases the
product (or coupon to encourage repeat use).
• Sampling
– Allowing the consumer to try the product or
service (in-store, mailed, dentist office,
newspaper).
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CONSUMER PROMOTIONS
Types of Consumer Promotions
• Contests and Sweepstakes
– Create excitement by promising “something for
nothing” and offering impressive prizes.
– Contests are based on skill or ability; you
compete for prizes.
– Sweepstakes are based on luck; send in your
name for a drawing.
• Specialties
– Presents the brand’s name on something that is
given away as a reminder
– Key chains, pens, calendars, tote bags, coffee
mugs.
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CONSUMER PROMOTIONS
Types of Consumer Promotions
• Premiums
– Tangible reward for a particular act
– Work by adding value to the product
•
•
•
•
Store premiums: given at retail site
In-pack premiums (in the package)
On-pack premiums (attached to package)
Container premiums (package is premium)
– Self-liquidating: mail payment with proof of
purchase
Prentice Hall, © 2009
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CONSUMER PROMOTIONS
How to Use Consumer Promotions
• Awareness
– McDonalds “movie” toys
• Trial
– Get the right people involved with the product through
sampling, price deals, coupons, refunds, rebates
• Maintain/increase market share
– Convince people to switch
– Price deals work with low-loyalty products
– Characters on premiums associate the brand with the
character
• Brand reminder
– Remind customers of positive experience with ad copy,
specialty items, thank you gifts
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TRADE PROMOTIONS
What are trade promotions?
• Trade—all those involved in the channel
of distribution including buyers, brokers,
distributors, wholesalers.
• Marketers try to get the “trade” involved
in promotions to make their marketing
effort effective.
• Trade promotions give channel members
information about products and their
selling points to encourage them to
provide shelf space and push products.
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TRADE PROMOTIONS
Types of Trade Promotions
• Point-of-Purchase Display (POP)
– Manufacturers design and distribute displays
to retailers to draw attention to their products.
– Racks, display cartons, banners, signs, moving
parts, lights, action.
• Retail (Dealer) Kits
– Materials that support retailer’s selling efforts
or help representatives make sales calls on
prospective retailing customers.
– Product spec sheets, ad slicks/discs.
Prentice Hall, © 2009
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TRADE PROMOTIONS
Types of Trade Promotions
• Trade Incentives and Deals
– When a manufacturer gives sellers a financial
reward for purchasing a certain amount of
product or supporting a promotion.
– Includes special displays, extra purchases,
superior store locations, more local promotion.
– Retailers get special discounts, free goods,
gifts, cash from manufacturer.
– Advertising allowances: deals on coop
advertising and deals for using promotional
displays.
Prentice Hall, © 2009
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TRADE PROMOTIONS
Types of Trade Promotions
• Contests
– Advertisers can develop contests and
sweepstakes to motivate resellers.
– Contests are far more common than
sweepstakes because they can be more
closely tied to product sales (exceeds the
quota by the greatest percentage, win the
contest).
• Trade Shows and Exhibits
– When companies in the same industry gather
to present and sell their merchandise and
demonstrate their products.
Prentice Hall, © 2009
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TRADE PROMOTIONS
How to Use Trade Promotions
• The two primary roles for a trade promotion:
– Stimulating in-store merchandising or other trade
support.
– Creating excitement among those responsible for
selling the product.
• Trade promotions are also used to:
– Manipulate wholesalers’ and retailers’ inventory
levels.
– Expand product distribution to new geographic
areas or classes of trade.
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TRADE PROMOTIONS
How to Use Trade Promotions
• Manipulate Demand
– Pull strategies: creating or increasing customer
demand so product is “pulled” through the channel.
– Push Strategies: give channel members reasons to
carry products or give them better shelf space so
product is “pushed” through the channel.
• Attention
– POPs get attention and stimulate impulse purchases
• Motivation
– Contests, trade deals, and other incentives motivate
trade/channel members to make sales.
• Information
– Trade show displays give information about products,
allow companies to gather and compare products.
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CROSSOVER PROMOTIONS
What are crossover promotions?
• Promotions that cross over to other areas
of marketing and blur the lines between
promotion, advertising, and public
relations
– Sponsorships
– Event marketing
– Interactive and Internet promotions
– Loyalty programs
– Comarketing/partnership promotions
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CROSSOVER PROMOTIONS
Sponsorships and Event Marketing
• Sponsorships are when companies support
an event, say a sporting event, concert, or
charity either financially or by donating
supplies and services.
• Event marketing means building a
product’s marketing program around a
sponsored event, such as the Olympics or
a golf tournament.
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CROSSOVER PROMOTIONS
Other Promotional Support
• Blimps, balloons, inflatables, and
skywriting planes capture attention and
create excitement at events.
– Goodyear Blimp
– Met Life’s Snoopy blimps
– Inflatable Spiderman to promote the movie
• Internet sweepstakes
• Internet coupons
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CROSSOVER PROMOTIONS
Loyalty Programs
• Also called a continuity or frequency
program
• A promotion to increase customer retention
• Frequent flyers programs, TGI Friday’s
“Frequent Fridays”
• These programs also capture information to
use for more targeted promotions and
advertising.
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CROSSOVER PROMOTIONS
Partnership Programs
• Comarketing involves manufacturers developing
marketing communication programs with their main
retail accounts, instead of for them.
• Cobranding occurs when two companies come
together to offer a product (e.g., American Airlines,
Citibank Visa).
• With licensing, one company gives another
company the right to use its legally protected
trademarks and logos on products and in advertising
or promotion.
• Tie-ins are when two companies are displayed,
advertised, or promoted together to multiply impact
(e.g., McDonald’s Shrek Happy Meals).
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PROMOTION STRATEGY
Promotion Objectives
• Introduce a new product
• Create brand awareness
• Brand building
– Create affinity between brands and buyers
– Create brand involvement through
positive associations
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PROMOTION STRATEGY
The Issue of Brand Building
• Brand building is long-term and focused on the
brand’s core values, while promotion is short
term and price-focused.
• Critics say price promotions can undermine the
brand’s established values and erode customer
brand loyalty.
• Proponents say promotion can help build brand
image.
• The solution: advertising must be more
accountable and promotion more brand-focused;
and they must work together.
Prentice Hall, © 2009
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PROMOTION STRATEGY
Promotion Integration
• Advertising and promotion have different strengths
that, when combined with other marketing
communication tools, can effectively accomplish
objectives.
• Both seek to increase the number of customers and
usage of the product by existing customers.
Advertising
• Creates a brand image over time
• Relies on emotional appeals
• Adds tangible value to product
or service through image
• Contributes moderately to shortterm profitability
Promotion
• Creates immediate action
• Added value strategies rely on
rational appeals; impulse
appeals use emotion
• Adds tangible value to product
or service
• Contributes greatly to shortterm profitability
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PROMOTION STRATEGY
Promotion Effectiveness
• Effectiveness is measured by volume,
response rates, and redemption (coupons,
refunds, rebates) rates.
• Payout planning seeks to produce
promotions that increase sales and profits.
• Promotions can deliver sales but they must
be well planned and executed in order to
enhance the brand’s reputation.
Prentice Hall, © 2009
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mechanical, photocopying, recording, or otherwise, without the prior written
permission of the publisher. Printed in the United States of America.
Copyright © 2009 Pearson Education, Inc.
Publishing as Prentice Hall
Prentice Hall, © 2009
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