How Are Consumer Promotions Used?
Although an action response is the goal of most sales promotions, some programs
are designed to build awareness first, but always with action as the ultimate goal.
Promotions can deliver on a number of our Facets of Effects and drive a specific
set of objectives.
Awareness
The first challenge is to create awareness of the brand, which is a real strength of
advertising and the first step in consumer decision making. However, sometimes
awareness can be increased when advertising is combined with an appropriate
promotion to call attention to the brand name in order to get people to try the
product.
Trial
Creating awareness will only take the product so far, however. Consumers must
also perceive the brand as offering some clear benefit compared to the
competition. Sales promotion does this by arranging for experiences such as
special events where people can try the product or see it demonstrated. Trial is
one of the most important objectives of sales promotions, but it is essential to get
the right people, the target audience, involved with the product.
Sales promotion has other tools that lead to trial such as sampling. Sampling is an
effective strategy for introducing a new or modified product or for dislodging an
entrenched market leader by enticing potential users to try the product. As a
general rule of thumb, retailers and manufacturers maintain that sampling can
boost sales volume as much as ten times when used with a product demonstration
and 10 to 15 percent thereafter. Sampling is generally most effective when
reinforced on the spot with product coupons. Consumers like sampling because
they do not lose money if they dislike the product.
Another way sales promotion can motivate people to try a new product is to offer
a price deal. These price deals are usually done through coupons, refunds, rebates,
or premiums. Refunds and rebates are effective because they encourage
consumers to purchase a product before a deadline. In addition, refunds stimulate
sales without the high cost and waste associated with coupons.
Coupons mainly encourage trial, induce brand switching, and reward repeat
business. The main advantage of the manufacturer’s coupon is that it allows the
advertiser to lower prices without relying on cooperation from the retailer to
distribute them. Advertising for these deals include sales, flyers, newspaper ads,
and broadcast ads.
Maintain or Increase Market Share
In addition to encouraging trial of a new product, another purpose of price deals is
to convince prospective users to switch from an established competing brand. A
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price deal can also be used to reward loyal users in order to encourage their repeat
business. Price deals are particularly effective in those situations where price is an
important factor in brand choice or if consumers are not brand loyal.
To maintain a brand’s presence, increase its market share, or accomplish
counter-competitive actions, marketers use promotional tools such as coupons,
premiums, special events, and contests and sweepstakes. In addition to serving as
a reward for buying a product, premiums, for example, can enhance an
advertising campaign or a brand’s image.
Brand Reminder
In addition to new product launches, promotions are also used at the reminder
stage. This means that you change advertising copy to remind customers about the
positive experience they had with the product and use sales promotions to
reinforce loyalty with coupons, rebates, and other rewards. Specialty advertising
serves as a reminder to the consumer to consider the product. Advertisers use
specialty items to thank customers for patronage, to reinforce established products
or services, and to generate sales leads.
TRADE PROMOTIONS
Consumer awareness and desire mean nothing unless the product is available in
places that the consumer expects to see it. Therefore, marketers know that they
must engage the trade in programs if their consumer promotions are to be
effective. In such programs, trade refers to all the people involved in the channel
of distribution—buyers, brokers, distributors, wholesalers, dealers, franchisees,
and retailers.
Principle:Consumer promotion is of little use if the product is not available where
the consumer can find it.
Trade promotions are usually directed at distribution channel members, a practice
that is sometimes referred to as channel marketing. It can also be used in any
kind of situation where one business is promoting its services to another, which
also includes personal sales and materials used in sales presentations. Typically,
companies spend more than half of their total promotion budget on promotions
directed at the trade.
Types of Trade Promotion
Trade advertising directed at wholesalers and retailers provides trade members
with information about new products and their selling points. In addition, trade
promotion techniques, especially price discounts, point-of-purchase displays, and
advertising allowances, motivate retailers to provide shelf space for products and
consumer promotions. Here are the most common types of trade promotions:
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Retailer (dealer) kits.Materials that support retailers’ selling efforts or that help
representatives make sales calls on prospective retailing customers are often
designed as sales kits. The kits contain supporting information, such as detailed
product specifications, how-to display information, and ad slicks—print ads that
are ready to be sent to the local print media as soon as the retailer or dealer adds
identification, location, promotion price, or other information.
Trade incentives and deals. Similar to consumer price deals, a manufacturer may
reward a reseller financially for purchase of a certain level of a product or support
of a promotion. These promotional efforts can take the form of special displays,
extra purchases, superior store locations, or greater local promotion. In return,
retailers can receive special allowances, such as discounts, free goods, gifts, or
cash from the manufacturer. The most common types of trade deals are buying
allowances for increasing purchases and advertising allowances, which include
deals on cooperative advertising and display allowances, that is, deals for
agreeing to use promotional displays.
Contests. As in the case of consumer sales promotion, advertisers can develop
contests and sweepstakes to motivate resellers. Contests are far more common
than sweepstakes, mainly because resellers find it easy to tie contest prizes to the
sale of the sponsor’s product. A sales quota is set, for example, and the retailer or
person who exceeds the quota by the largest percentage wins the contest.
Point-of-purchase promotions.According to the Point-of-Purchase Advertising
International Association (POPAI), the marketing-at-retail industry includes two
forms: (1) manufacturer-designed displays distributed to retailers who use the
displays to showcase products and create a personality for their stores, and (2)
signs and displays used by retailers to cue their brand images and differentiate
their stores from those of competitors. These are referred to as point-of-purchase
(PoP) materials. Although PoP forms vary by industry, they can include special
racks, display cartons, banners, signs, price cards, and mechanical product
dispensers, among other tools.
Trade shows and exhibits. The trade show is a place where companies within the
same industry gather to present and sell their merchandise, as well as to
demonstrate their products. Exhibits are the spaces that are designed to showcase
the product. This chapter’s Inside Story features a copywriter and content
strategist and an iPad based game he designed as part of an interactive trade show
booth exhibit.
How Is Trade Promotion Used?
The ultimate gauge of a successful trade promotion is whether sales increase.
Trade promotions are primarily designed to get the cooperation of people in the
distribution channel and to encourage their promotion of the product to the
consumer. Sales promotion brings resellers to that point of conviction. There are
two primary roles for a trade promotion:
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1. Trade support. To stimulate in-store merchandising or other trade support (for
example, feature pricing, superior store location, or shelf space).
2. Excitement.To create a high level of excitement about the product among
those responsible for its sale.
In addition, trade promotion is also used to accomplish other marketing
objectives, such as manipulating levels of inventory held by wholesalers and
retailers and expanding product distribution to new areas of the country or new
classes of trade.
Demand: Push and Pull Strategies
To understand the role of trade promotion, consider how sales promotion is used
in push and pull strategies. Consumer and trade promotions interact through
complementing push and pull strategies.
If consumers really want to try a product, based on what they have heard in
advertising and publicity stories, they will ask their local retailers for it, which is
called a pull strategy; that is, by asking for it they will pull the product through
the distribution channel.
Principle:Consumer and trade promotions interact through complementing
pushandpull strategies.
A push strategy pushes the product through the channel by convincing
(motivating or rewarding) members of the distribution network to carry a product.
Here are the most common types of incentives and trade deals used with retailers
as part of a push strategy.
Bonuses. A monetary bonus, also called push money or spiffs, is paid to a
salesperson based on units that salesperson sells during a period of time.
Dealer loaders.Loaders are premiums (comparable to a consumer premium)
that a manufacturer gives to a retailer for buying a certain amount of a
product. A buying loader rewards retailers for buying the product. Display
loaders reward retailers by giving them the display after the promotion ends.
Buying allowances. A manufacturer pays a reseller a set amount of money or
a discount for purchasing a certain amount of the product during a specified
time period.
Advertising allowances. The manufacturer pays the wholesaler or retailer a
certain amount of money to advertise the manufacturer’s product. This
allowance can be a flat dollar amount or it can be a percentage of gross
purchases during a specified time period.
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Co-Op advertising. In a contractual arrangement between the manufacturer
and the resellers, the manufacturer agrees to pay a part or all of the advertising
expenses incurred by the retailers.
Display allowance. A direct payment of cash or goods is given to the retailer
if the retailer agrees to set up the point-of-sale display. Before issuing the
payment, the manufacturer requires the retailer’s signature on a certificate of
agreement.
Attention
Some trade promotions are designed not only to get the attention of the trade
members, but also to grab the attention of customers. PoP displays are designed to
get the attention of shoppers when they are in the store and to stimulate impulse
purchases. They are used by retailers, but provided by manufacturers.
The importance of PoP continues to increase, as we move to a self-service retail
environment in which fewer and fewer customers expect help from sales clerks.
POPAI has found that the PoP forms that have the greatest impact on sales are
displays that tie in with entertainment, sports, or charities. In the Practical Tips
feature located in this chapter, a marketing consultant explains how to best plan
effective PoP promotions.
Motivation
Most trade promotions are designed to, in some way, motivate trade members to
cooperate with the manufacturer’s promotion. Incentives such as contests and
trade deals are used. Trade incentive programs are used to stimulate frequency
and quantity of purchase and encourage cooperation with a promotion.
Information
Trade shows, which are an information-rich environment, display products and
provide an opportunity to sample and demonstrate products, particularly for trade
buyers, the people who buy for stores. Trade shows also permit companies to
gather information about their competition.
MULTIPLATFORM PROMOTIONS
This sectionfocuses on sponsorships, event marketing, loyalty programs, and
co-marketing or partnership promotions. Many of these promotional techniques, such as
sponsorships and event marketing, cross over to other areas of marketing and blur the line
between promotions, advertising, and public relations.
Sponsorships and Event Marketing
Sponsorships occur when companies support an event, such as a sporting event,
concert, or charity, either financially or by donating supplies and services. Event
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marketing means building a product’s marketing program around a sponsored
event, such as the Olympics or a golf tournament.
Sponsorships and event marketing include sports, entertainment tours and
attractions, festivals, fairs and other annual events, cause marketing, and support
for the arts. Cause marketing sponsorship is a growth area with spending at
around $1.6 billion in 2009.
Companies undertake sponsorships to build brand associations and to increase the
perceived value of the brand in the consumer’s mind. The important thing is that
the event must project the right image for the brand. Companies that use
sponsorships focus their efforts on supporting causes and events that matter most
to employees and customers. Although the most common sponsorships are around
events, particularly sporting events, brands can also sponsor product related
websites that are particularly effective at creating sales or recruiting people. The
importance of sponsorships is growing worldwide.
Event Marketing
The term event marketing describes the marketing practice of linking a brand to
an event. Marketers use related promotional events, such as a tour or appearance
of the product or its spokesperson at a mall or sporting event, to gain the attention
and participation of people in the target audience who attend the event. The event
showcases the brand, often with sampling, coupons, other incentives, and
attention-getting stunts. To be successful, the event must match the brand to the
target market’s lifestyle. Events can also be used to build goodwill.
Business-to-business promotions also use events to reach trade audiences, which
can include sales staff, distributors, retailers, and franchisees. These stakeholders
are invited to participate in the event as a reward for their support.
The granddaddy of all events is the Super Bowl. The ads are the most expensive
on television; prices can top $3 million for a 30-second commercial, which does
not include production costs. These costs make sense because of the huge
audience that is reached.
Its not just the commercials, however, that get the attention of marketers. Brands
buy a Super Bowl spot to participate in all the frenzy that surrounds the event
both before will pre-teaser ads, curing the game, and post-game coverage. The
television spots create the opportunity for wide-ranging promotional activity that
involve publicity, point of purchase displays, video clips, website and social
media, search engine ads, and relationship programs with important partners, such
as retailers and shareholders. The A Matter of Principle feature in this chapter
makes the point that even in big-event advertising, it is still the Bigbig idea that
counts.
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Ambush marketing is the term given to promotional stunts used at events, such
as the Olympics and the soccer and rugby World Cups, by companies that are not
official sponsors. Ambush marketing typically occurs when one brand is trying to
undermine the presence of a rival that is sponsoring an event. If the stunt can
create enough confusion, it can reduce the return on the official sponsor’s
investment, and at the same time, pick up additional visibility through publicity.
Other Promotional Support
Advertisers have used blimps, balloons, inflatables, and even skywriting planes to
capture attention and create an aura of excitement at events.
Loyalty Programs
Another type of program that crosses the line between advertising and promotion
is frequency, or loyalty programs. A loyalty program, also called a continuity or
frequency program (such as airline frequent flyer programs), is a promotion to
increase customer retention. Typically the higher the purchase level, the greater
the benefits.
Today, loyalty programs are synonymous with the word frequent.The frequent
flyer club, first created by United Airlines in 1981, is the model for a modern
continuity program. Continuity programs work in competitive markets in which
the consumer has difficulty perceiving real differences between brands. The key
to creating a successful loyalty program is offering memorable incentives that
consumers want.
Marketers like membership programs because they also generate information for
customer databases, which can be used to more specifically target customers with
promotions and advertising materials.
Partnership Programs
Another promotion tool that crosses the lines is the partnership program. Co-marketing
involves manufacturers developing marketing communication programs with their main
retail accounts, instead of for them. If done right, these partnerships strengthen
relationships between manufacturers and retailers. Co-marketing programs are usually
based on the lifestyles and purchasing habits of consumers who live in the area of a
particular retailer.
Co-branding
When two companies come together to offer a product, the effort is called
co–branding. Both companies are equally present in the product’s design and
promotion, and both get to build on the other company’s brand equity.
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Licensing
With licensing, legally protected brand identity items, such as logos, symbols, and
brand characters, must be licensed, that is, a legal contract gives another company
the right to use the brand identity element. In brand licensing, a company with an
established brand “rents” that brand to other companies, allowing them to use its
logo on their products and in their advertising and promotional events.
Tie-ins and Cross-Promotions
Another type of cooperative marketing program is a tie-in or cross-promotion,
which is an effective strategy for marketers using associations between
complementary brands to make one plus one equal three. The intent is to spur
sales. Ads are also designed to tie the two products together, and the sponsoring
companies share the cost of the advertising.
The biggest cross promotions are arranged around movies and other entertainment
events. Tie-ins succeed because brands can leverage similar strengths to achieve
a bigger impact in the marketplace. Typically, marketers align themselves with
partners that provide numerous complementary elements, including common
target audiences, purchase cycle patterns, distribution channels, retailer
penetration, and demographics to drive their products and promotions through
retail channels and into the minds of consumers.
An interesting, although questionable, promotion was Bud Light’s use of “Fan
Cans.”ItCans. “It raised questions about rogue “tie-in” strategies that were not
sanctioned by the schools. Others complained that it promoted drinking among
students, many of whom were underage.
Sales Promotion and Integration
Similar to direct response and other marcom tools, promotions are strategically
designed to work within a mix of brand messages and experiences to build brand
strength and presence. When all the marketing tasks are driven by a common
strategy and shard objectives, the company communicates with the consumer in a
single voice with a consistent creative approach.
An example of a multiplatform promotion that demonstrates how a variety of
media and tools can work together was the Voyeur Project for HBO that won a
Grand Prix at the Cannes Film Festival.
END-OF-CHAPTER SUPPORT
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