Chapter 11 – Sales Promotion and Point of Purchase
TRUE/FALSE
1. Sales promotion is the use of incentive techniques that create a perception of greater brand value
among consumers, the trade and business buyers.
2. One of the purposes of sales promotion is to provide an affiliation value for a brand
3. One reason for the popularity of sales promotions is that the results are easy to document.
4. Retailers often create trade promotions to entice manufacturers to supply the outlet with the
manufacturer’s most popular items.
5. Historically, more money has always been spent on sales promotions than on advertising.
6. Although sales promotion can attract attention and motivate trial purchase, it is rarely used for new
brand introduction because advertising controls that aspect.
7. Coupons are a good sales promotion because they induce brand switching and stimulate repeat
purchases, and the timing and distribution are controlled by the manufacturer.
8. Attaching a small bottle of Gillette shaving cream to a razor is an on-package sampling technique.
9. An objective for trade promotions is to decrease store traffic, which would make it easier for the
customer to shop.
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OBJ: 11-3
10. The fight for space on grocers’ shelves has become so competitive that manufacturers occasionally just
pay cash to food store chains to get the chains to stock the item.
11. Vertical cooperative advertising involves the sharing of advertising costs between a manufacturer and
a retailer.
12. One of the advantages of sales promotions over advertising is that sales promotions offer the
opportunity for reward without risk.
13. One potential downside of promotions is that a short-term gain may actually be offset by a drop in
future sales.
14. P-O-P refers to materials used in the retail setting to attract shoppers attention to ones product, convey
primary product benefits, or highlight pricing information.
15. A display rack that stocks product is placed above the cash register. The cashier can reach the product
for the consumer. The front of an overhead merchandiser usually carries signage. This is called a dump
bin.
16. Support media are used to reinforce a message that is being delivered by some other advertising
vehicle.
17. Billboards, posters, and outdoor signs are perhaps one of the newest forms of advertising.
18. Out-of-home media is a term used to describe any media other than television.
19. Transit advertising can be valuable when an advertiser wishes to target adults who live and work in
major metropolitan areas.
20. Transit advertising works best for building or maintaining brand awareness.
MULTIPLE CHOICE
1. Two of the basic forms of sales promotion are ____ sales promotion and ____ sales promotion.
a.
sales force; consumer-market
c.
sales forces; trade-market
b.
trade-market; consumer-market
d.
short-term oriented; long-term oriented
2. Which of the following is NOT typically a service that advertising agencies provide to clients?
a.
preparation of sales promotion materials
b.
preparation of creative elements of marketing communications
c.
promotion planning
d.
media placement
3. Several factors have created a short-term orientation among marketing managers. Which of the
following is a reason why this type of orientation exists in many organizations?
a.
pressure from stockholders to produce higher quarterly revenue
b.
pressure from shareholders to produce higher quarterly profits
c.
a bottom line mentality in many organizations
d.
rewards and punishments based on short-term returns are on the rise for most managers
4. The primary role for consumer sales promotion is to
a.
enhance the image of a brand.
b.
elicit an immediate purchase from a customer.
c.
encourage long-term purchasing of a brand.
d.
have a preference-building effect for a brand.
5. In recent years, sales promotion expenditures have grown at an annual rate of about 4 to 8 percent,
compared to
a.
a drop in sales promotion in foreign countries.
b.
close to 100% increase in advertising.
c.
no increase for advertising.
d.
about a 3 to 5 percent rate for advertising.
6. Which one of the following is not a reason why sales promotions have become a more popular tool for
companies over the past 10 to 15 years?
a.
Companies are demanding greater accountability for their marketing expenditures.
b.
Companies are feeling the pressure for immediate revenue.
c.
Companies are understanding the benefits of adding value in consumers’ minds.
d.
Companies are understanding the need for a consistent image over time.
7. A ____ requires a consumer to pay most of the cost of an item received as a premium.
a.
free premium
c.
self-liquidating premium
b.
price-off deal
d.
trial offer
8. The most popular type of sampling for food and cosmetic products is ____ sampling.
a.
in-store
c.
mail
b.
door-to–door
d.
on-package
9. An advantage of coupons as a sales promotional tool is that
a.
it makes it possible to give a discount to a price-sensitive consumer while still selling the
product at full price to other consumers.
b.
a coupon-redeeming consumer is often a competitive brand user, so the coupon can induce
brand switching.
c.
in-package coupons can induce repeat purchases.
d.
all of these are advantages of coupons as a sales promotional tool.
10. The difference between contests and sweepstakes is that
a.
contests require skill, and sweepstakes require luck.
b.
contests are used to generate long-term interest in a brand, and sweepstakes are used to
generate immediate interest.
c.
contests can require an entry fee, and sweepstakes cannot.
d.
contests focus on the game, and sweepstakes focus on the brand.
11. A distinguishing feature of a self-liquidating premium is that it
a.
offers a consumer cents off or even dollars off merchandise at the point of purchase.
b.
requires a consumer to pay most of the cost of an item received as a premium.
c.
is offered free or at a reduced price with the purchase of another item.
d.
is not particularly effective with brand loyalty.
12. Trial offers are similar to samples except that trial offers
a.
are used for more expensive items.
b.
are only delivered to consumers in logo-emblazoned “mobile-trial” vehicles.
c.
can only be used for low-price convenience goods.
d.
are only appropriate for new brands in the market.
13. A money-back offer requiring a buyer to mail in a form requesting the money back from the
manufacturer, rather than the retailer (as in couponing) is:
a.
brand switching
c.
coupon
b.
rebate
d.
manufacture verticality
14. You work for a company that manufactures large appliances, like refrigerators and stoves In an effort
to move your product, you offer a hundred dollars to any retail salesperson who can sell ten of your
appliances in a week. This is an example of
a.
a sweepstakes.
c.
an allowance.
b.
a slotting fee.
d.
an incentive.
15. In order for an item to be defined as a specialty-advertising item, it must
a.
contain the sponsor’s name and/or logo.
c.
have no use but as a promotional item.
b.
contain no promotional message.
d.
be charged for.
16. Powerful retailers are demanding cash payments from manufacturers for access to shelf space. These
payments are known as
a.
bribes.
c.
slotting fees.
b.
merchandise allowances.
d.
co-op advertising fees.
17. If a company’s advertising campaign and a sales promotion have different purposes, the company
would be wise to
a.
devote its budget to advertising and drop the sales promotion effort.
b.
devote its budget to sales promotion and drop the advertising effort.
c.
coordinate the look and feel of both efforts.
d.
make sure that the two efforts have separate, strong looks and feels.
18. Which of the following is not considered P.O.P. advertising?
a.
Window and Door signage.
b.
Dump bin.
c.
A billboard positioned in a supermarket parking lot.
d.
Shopping Cart ads.
19. Which of the following is a strategic advantage for manufacturers of P-O-P advertising aimed at trade
and business markets?
a.
It aids in securing trade market cooperation for their brand(s)
b.
It encourages potential retailers to support their brand over another
c.
It can help win additional shelf space and exoposure inside the retail store
d.
All of these statements are possible advantages of P-O-P for manufacturers
20. Perhaps the oldest form of advertising is:
a.
billboards
c.
magazine
b.
newspaper
d.
point-of-purchase
21. Most advertising experts suggest that billboard copy should not exceed ____ words.
a.
3
c.
9
b.
6
d.
15
22. Support media are called support media because they
a.
are supported solely by advertising expenditures.
b.
expand on messages being delivered by other media.
c.
must be supported by independent physical structures.
d.
reinforce advertising messages being delivered by other media.
23. An advantage of billboards as a medium is
a.
wide exposure of a message in a specific local market.
b.
the large size and lighting attracts attention.
c.
reaching passersby with a message related to an immediate need.
d.
All of these statements are advantages of billboards.
24. An advertiser considers using transit advertising as an advertising vehicle. This particular vehicle
works most effectively when the advertiser:
a.
is trying to create or build brand awareness
b.
is trying to create of build brand preference
c.
needs a limited number of exposures to members of the target market
d.
has a message that is having trouble breaking through the clutter in other media
25. Directory advertising is unique among support media in that it
a.
helps the consumer follow through on a product purchase.
b.
enhances awareness-building campaigns that an advertiser is developing through other
media vehicles.
c.
has not yet been designed to serve specific ethnic or interest groups.
d.
requires short lead times.
Scenario 11-1
When one runs a World Wide Web word search of the term sales promotion, the result is more than
700,000 matches. The list of links is as diverse as it is extensive. A click of a mouse button can bring
you to the home page of a wide variety of full-service Sales Promotion Agencies providing strategic
promotion planning and promotion development/implementation with emphasis on retail grocery
products.
26. (Scenario 11-1) One of the tie-in packages offered by Co-op Promotions gives companies the
opportunity to place a sample or a coupon inside 2 million Hamilton Beach/Proctor Silex toaster and
toaster oven packages. Which of the following should not be considered a downside to a couponing
program like this?
a.
There is no way to prevent current users from redeeming coupons for products they would
buy anyway.
b.
Fraud and misredemption are chronic, costly problems.
c.
It does not allow a company to give price-sensitive customers a discount while selling the
product at full price to other customers.
d.
The timing of redemption is difficult to control.
27. (Scenario 11-1) Pegasus Sales Promotion claims that just about any business can benefit from a scratch
card promotion. However, an astute marketer realizes that, as with many different kinds of
sweepstakes,
a.
they are not an effective way to build store traffic.
b.
it’s often difficult to get any message across in the context of a game.
c.
they are not an effective way to spur repeat trips to a retailer.
d.
the lack of legal guidelines can create massive problems for companies.
28. (Scenario 11-1) If a company creates a trade show booth, the company is employing ____ to sell its
product.
a.
a point-of-purchase device
c.
a horizontal cooperative program
b.
a facilitation strategy
d.
a push strategy
Scenario 11-2
The White Noise recording company is getting ready to release the first compact disc from its newest
band, Wet-Dog. Because White Noise’s last three releases have been dismal failures, the company
needs a quick influx of cash. The company has decided to use sales promotions to move the product
through record stores and into customers’ hands.
29. (Scenario 11-2) White Noise commissions the building of point-of-purchase displays for record stores.
The displays hold 144 compact discs, with headphones for patrons to listen to selections off each disc.
This is known as
a.
a consumer-market sales promotion.
c.
an incentive.
b.
an on-package sampling.
d.
a trade-market sales promotion.
30. (Scenario 11-2) The point-of-purchase displays commissioned by White Noise need to be set up and
maintained. Any record store that agrees to do this gets Wet-Dog compact discs free. This is known as
a.
an incentive.
c.
a merchandise allowance.
b.
a maintenance exchange.
d.
a labor-product trade-out.
31. (Scenario 11-2) White Noise knows that the release cannot succeed without gaining distribution in
large record store chains. However, many of these chains are refusing to carry the product, saying that
shelf space is too precious to be used on an unknown brand like Wet-Dog. However, buyers for these
chains say that they might be willing to carry the product if White Noise makes a substantial direct
cash payment to the chain. This payment is known in the trade channel as
a.
a slotting fee.
c.
an incentive.
b.
a merchandise allowance.
d.
a vertical cooperative program.
Scenario 11-3
It’s time to take your weekly trip to the grocery store. You bring a coupon good for 50¢ off a national
brand of coffee. As you walk the aisles, a woman asks if you’d like to try a slice of pizza. After you
taste it, she points out where the brand is kept in the freezer display. When you get to your favorite
brand of toothpaste, you’re delighted to find that a toothbrush, made by the people who make your
toothpaste, is attached to the box for no extra charge. You turn the corner and run into a cardboard
cutout of one of the stars from a leading medical drama on TV. This display has a medical kit full of a
new brand of pain reliever built into it. Your last stop is the cereal aisle, and on the back of your
favorite brand is a chance to buy a T-shirt with a picture of the cartoon spokes-animal for the cereal for
only $7.95.
32. (Scenario 11-3) Which of the several possible objectives of promotion did all these activities have in
common?
a.
elicit an immediate purchase of a product.
c.
create awareness of a product attribute.
b.
build an image for a product.
d.
create preference for a product.
33. (Scenario 11-3) Of the sales promotions you encountered in the store, which one was directed at the
trade channel?
a.
The coupon
c.
The display
b.
The in-store sample
d.
The T-shirt
Scenario 11-4
General Mills brand breakfast cereals face strong competition in the dry cereal category from brands
like Kellogg’s and Quaker Oats. Still, General Mills brand like Wheaties and Cheerios maintain a
strong share of the market. As a manufacturer, General Mills knows that they must stimulate consumer
demand for their brands, but they must also stimulate retailer support for these brands as well. Their
market research shows that some consumers are very loyal to certain brands of cereal, but most
consumers are interested in some level of variety seeking behavior in this product category. As a
result, General Mills is constantly examining different sales promotion tools to stimulate consumers to
consider their brand when shopping for breakfast cereal.
34. (Scenario 11-4) General Mills had learned that, along with Kellogg’s and Quaker Oats, they often
target the same customers with their advertising. This problem of many customers receiving too many
messages from too many different firms has been addressed by using sales promotion elements such as
coupons. This is an example of ____ driving growth in sales promotion.
a.
short-term orientation
c.
demand for greater accountability
b.
increased power of retailers
d.
media clutter
35. (Scenario 11-4) General Mills has experimented with selling “two packs” of several brands of cereal.
These are two standard size boxes of cereal shrink wrapped together and offered at a special price. The
objective for this form of consumer-market sales promotion is likely to ____.
a.
simulate a trial purchase
c.
stimulate a larger purchase
b.
stimulate a repeat purchase
d.
introduce a new brand
36. (Scenario 11-4) On the back of Wheaties boxes, General Mills has attached a coupon for a cookbook
offer. The book, entitled “Cooking with Wheaties” is available to consumers for a nominal charge of
$3.00 plus a $2.00 shipping and handling charge. This is an example of a ____.
a.
free premium
c.
coupon
b.
sweepstakes
d.
self-liquidating premium
Scenario 11-5
The local student chapter of the American Marketing Association (AMA) is preparing to begin a new
student membership drive. Previously, these efforts have focused on merely making incoming students
aware of the existence of the chapter and making announcements about upcoming events in classes.
The student AMA officer team wants the chapter to double in size during the upcoming school year.
While this seems like an overly ambitious objective, several of the officers are students in a marketing
communications class that teaches sales promotion techniques. These students have argued at several
recent meetings that the proper use of sales promotion can help the chapter to accomplish this goal.
37. (Scenario 11-5) The chapter‘s officers have decided to have a contest for all students who visit the first
meeting of the semester. At the end of the meeting, a visitor’s name will be drawn to win 25 free state
lottery tickets. Which of the following is the most likely outcome of this contest?
a.
it will help promote the features of the organization
b.
it will encourage students to visit future meetings
c.
it will foster existing members’ loyalty toward AMA
d.
it will stimulate high attendance at the first meeting of the semester
38. (Scenario 11-5) Students who normally attend the first meeting are also offered a ball cap with the
logo of the chapter embroidered on it. This is an example of a ____.
a.
price-off deal
c.
self liquidating premium
b.
free premium
d.
coupon
39. (Scenario 11-5) The local Kinko’s Copy Center has always supported student groups on campus. They
have agreed to support the student AMA chapter by contributing money to the club that is used for
advertising. Kinko’s expects that when they give money for such advertising that the logo of both
AMA and Kinko’s appear in the ad. This is an example of ____.
a.
a slotting fee
c.
a case allowance
b.
cooperative advertising
d.
a push strategy
Scenario 11-6
Lightships are blimps designed to be used as marketing and observational tools. Like many blimps,
they have state-of-the-art camera platforms that have provided aerial shots of such events as the U.S.
Open tennis tournament, the grand opening of EuroDisney, and many NASCAR races. In addition,
lightships also provide what is claimed to be a unique advertising opportunity. The hull of the blimps
can be used to display a 32-color image. At night, the entire hull and banner area can be internally lit
for extremely dramatic nighttime displays. Companies such as Kraft foods, Budweiser, Goodyear,
Monster.com, McDonald’s, and Reebok have used lightships as part of their advertising efforts.
Marketers of the lightships say that lightships can be used as a support vehicle or as a primary
advertising vehicle. There are currently sixteen lightships operating across three continents.
(www.lightships.com/info.html)
40. (Scenario 11-6) Most advertisers would consider lightships to be a support medium. This is because
a.
lightships are supported solely by advertising expenditures
b.
messages on the lightships function to expand on messages being delivered by other
media.
c.
the messages on the lightships are supported by independent physical structures.
d.
messages on the lightships function to reinforce advertising messages being delivered by
other media.
41. (Scenario 11-6) The use of a lightship is expected to deliver better results than the use of other out-of-
home media, such as billboards and transit advertisements, because
a.
billboards and transit advertisements cannot be targeted geographically.
b.
there are fewer blimps than there are billboards and transit advertisements.
c.
blimps featuring video and changing messages provide a higher degree of interactivity.
d.
billboards and transit advertisements are considered poor media for generating awareness.
OBJ: 11-6
Scenario 11-7
You are a media planner at a small advertising agency. Since it is Friday, you decide to take a long
lunch, returning to your office around 2:30 PM. When you get back to your desk, there is a stack of
messages waiting for you from account executives about pressing client issues. You must answer them
all before you get to start your weekend.
42. (Scenario 11-7) An account executive has sent a memo saying that a client is quite pleased the with the
results of the network TV buy that you made the previous month. Now client would like to use a
support media to target the specific geographic areas that have shown the strongest results. You fire off
a note stating that
a.
this may be a good opportunity to recommend the use of billboards.
b.
billboard advertising, transit advertising, and directory advertising can all accomplish this.
c.
this may be a good opportunity to recommend the use of transit advertising.
d.
this may be a good opportunity to recommend the use of direct advertising.
43. (Scenario 11-7) One message says that a client needs to reach consumers with a message that speaks to
the desire “eat right now.” The client has fast-food restaurants along a major freeway. Of course, since
it’s Friday, the client has already gone home for the day, so you leave a voice mail for the client saying
that you’ll call Monday to discuss the use of
a.
directory advertising like the Yellow Pages.
b.
event sponsorship like NASCAR family days.
c.
outdoor advertising like billboards.
d.
P-O-P advertising like kiosks in grocery stores.
44. (Scenario 11-7) A very successful small business in NYC customizes the exteriors of blackberries
using designs created by famous fashion designers and other artists. Its customers are high end
executives mostly on Wall Street for whom having a one-of-a-kind blackberry designed by an art
world icon offers the benefit of very classy one-upsmanship on colleagues. The business marketing
owner (also the CEO) wants to do some not-too-expensive advertising that will nevertheless reach this
special target audience. You suggest
a.
a full-color full-page ad in the in-flight magazines of American, United and Continental
airlines to save production cost but still reach business travelers
b.
transit ads and signage on train platforms for the commuter lines between wealthy NY and
Connecticut suburbs to Wall Street since this is the most common mode of transport to
work for this target audience.
c.
television ads on business roundtable shows like Wall Street Week
d.
a banner to be flown behind a small aircraft over Martha’s Vineyard during the three big
summer holidays: Memorial Day, 4th of July and Labor Day.
45. (Scenario 11-7) A client calls insisting that their billboard campaign is not working because no one is
seeing the billboards – that construction is routing traffic away from the routes three of his billboards
are on. You drive out to the locations of all three and report back that this is true in only one instance,
but that you will require the media buying firm to discontinue that board and refund that portion of
your media costs. How did you ascertain these facts?
a.
By doing a wikipedia search of billboards in the locations mentioned by the client
b.
By “riding the boards” yourself
c.
By reading Nielsen ratings for billboards in the geographic area of your client’s campaign
d.
By phoning relatives where these billboards are and asking about local traffic patterns
ESSAY
1. Describe the overall trend in spending on advertising and sales promotion since the 1980s. Outline at
least four reasons behind this trend.
ANS:
Today many marketers have shifted the emphasis of their promotional spending away from traditional
advertising and toward consumer, trade and business sales promotions. Sales promotion expenditures
have grown at an annual rate of about 4-8 percent, compared with about 3-5 percent for advertising.
2. You are opening a fine-dining establishment in your hometown. As part of this effort, you are
considering offering a consumer frequent-diner program. Briefly describe how a frequency program
works. What are the advantages associated with such a program?
3. Jiffy Lube relies heavily on couponing in local newspapers and coupon sheets to promote its basic oil
change service. What are four possible advantages that Jiffy Lube gains from using coupons?
ANS:
The book outlines five advantages to couponing in this way.
4. Explain what is meant by the term push strategy. Describe four different techniques commonly used as
part of a push strategy.
ANS:
A push strategy is an attempt by marketers to encourage purchases by members of the trade thus
helping to push a brand into the distribution channel until it ultimately reaches consumers. The sales
5. Unquestionably, there are numerous positive things that can result from a properly planned sales
promotion. However, a manager must also realize that there are potential negatives to a sales
promotion effort. As a wise manager, what kind of questions would you ask yourself before
committing a substantial amount of money to a sales promotion?
ANS:
1. If I am considering a price incentive or giveaway, will my brand be perceived as cheap, with no real