CHAPTER 11
Sales Promotion and Point of Purchase
PPT 11-1
KEY TERMS
sales promotion
consumer-market sales
promotion
trade-market sales
promotion
business-market sales
promotion
coupon
price-off deal
premiums
free premium
self-liquidating premium
advertising specialties
contest
sweepstakes
sampling
in-store sampling
door-to-door sampling
mail sampling
newspaper sampling
on-package sampling
mobile sampling
trial offers
rebate
frequency programs
push strategy
push money
merchandise allowances
slotting fees
bill-back allowances
off-invoice allowances
cooperative advertising
trade shows
point-of-purchase (P-O-
P) advertising
short-term promotional
displays
permanent long-term
displays
support media
riding the boards
transit advertising
out-of-home media
aerial advertising
packaging
guerrilla marketing
SUMMARY
PPT 11-2
LO1 Explain the importance and growth of sales promotion.
Sales promotions use incentives to motivate action by consumers, members of the trade
channel, and business buyers. They serve different purposes than mass-media advertising
does, and many companies spend more on sales promotions than on advertising. Reasons
LO2 Describe the main sales promotion techniques used in the consumer market.
Coupons, price-off deals, phone and gift cards, and premiums provide obvious incentives
for purchase. Contests, sweepstakes, and product placements can be excellent devices for
Chapter 11: Sales Promotion and Point of Purchase ❖ 3
CHAPTER OUTLINE
INTRODUCTORY SCENARIO: Free Drinks!
This scenario highlights the IMC technique of sampling as a way to draw attention to a
brand. Examples of contemporary and successful sampling campaigns include:
• McDonald’s credits coffee giveaways with boosting breakfast revenues and
profits.
• Wendy’s 25 city “taste tour offered free burgers from mobile, tractor-trailer
rig kitchen.
• KFC gave away Crispy Strips coordinated with a print media campaign.
• Sonic Drive-In sponsors yearly Free Float Nights, drawing in customers who
soak up the ambience—and pay for hamburgers.
The scenario brings home the point that sampling and other giveaway strategies can boost
short-term sales as an IMC technique in the area of sales promotion.
I. Role of Sales Promotion
PPT 11-3, 11-4, 11-5
Sales promotion is the use of incentive techniques that create a perception of greater
brand value among consumers or members of the trade channel. Sales promotions like
coupons, giveaways, contests and sweepstakes can give energy to brand promotion
campaigns.
Consumer-market sales promotion includes coupons, price-off deals, premiums,
contests and sweepstakes, sampling and trial offers, product placements, refunds, rebates,
and frequency programs. All are ways of inducing household consumers to purchase a
firm’s brand rather than a competitor’s brand.
Trade-market sales promotion uses point-of-purchase displays, incentives, allowances,
Business-market sales promotion is designed to cultivate buyers in large corporations
who are making purchasing decisions about a wide array of products. The techniques are
similar to trade-market sales promotions.
A. Importance of Sales Promotion
Sales promotion is designed to affect demand differently than advertising. The role of
sales promotion is to elicit an immediate purchase from a customer. The goals for
sales promotion versus advertising are compared in text Exhibit 11.1.
TEXT EXHIBIT 11.1: Complementary Roles
Purpose of Sales Promotion Purpose of Advertising
Stimulate short-term demand Cultivate long-term demand
Chapter 11: Sales Promotion and Point of Purchase ❖ 4
Encourage brand switching Encourage brand loyalty
Induce trial use Encourage repeat purchases
measure
• Sales promotion expenditures have grown an annual rate of about 4 to 8
percent, compared to a rate of 3 to 5 percent for advertising.
• The investment by marketers in sales promotions is estimated to be $300
• Effective sales promotions require a big commitment from a firm. Often, as
much as 30 percent of brand management time is spent on sales promotions.
B. Growing Use of Sales Promotion
Marketers have shifted the emphasis of their promotional spending away from mass–
media advertising and toward consumer and trade sales promotions. Currently about
There are several reasons for heavy investment in sales promotion:
• Demand for greater accountability: When promotional activities are evaluated
for their contribution to sales and profits, it is difficult to draw specific
conclusions regarding the effects of advertising. Conversely, the immediate
effects of sales promotions are easy to document.
• Short-term orientation: Several factors have created a short-term orientation
among managers. Pressures from stockholders and a bottom-line mentality are
two reasons. Therefore, managers seek tactics that can have short-term effects.
• Consumer response to promotions: Shoppers search for extra value in every
product purchase. Coupons, premiums, price-off deals, and other sales
promotions increase the value of a brand in these shoppers’ minds.
• Proliferation of brands: Each year, literally thousands of new brands are
introduced into the consumer market. Gaining attention in this blizzard of
brands is no easy task. Marketers turn to sales promotions—product
placements, contests, coupons, and premiums—to gain some recognition in a
consumer’s mind and stimulate a trial purchase.
• Increased power of retailers: Retailers like Home Depot, Gap, Toys ‘R’ Us,
and Walmart now dominate retailing. Because of the lower price component
of the retailing environment, these retailers are demanding more deals from
manufacturers. Many of the deals are delivered as trade-oriented sales
promotions.
Chapter 11: Sales Promotion and Point of Purchase ❖ 5
• Media clutter: A nagging and traditional problem in the brand promotion
process is ad clutter. One way to break through the clutter is to feature a sales
promotion in print and broadcast ads and on the Internet.
II. Consumer Sales Promotion
PPT 11-6, 11-7, 11-8, 11-9
U.S. consumer product firms have made a tremendous commitment to sales promotion in
their overall marketing plans.
• Today nearly 75 percent of spending is allocated to sales promotion for
consumer goods. This is the opposite of 1970, when 70 percent of the budget
was allocated to advertising.
• Although the fundamental goal of sales promotion is to generate a sharp
increase in short-term demand, some marketing strategists also believe that
proper use of these techniques can make a long-term contribution.
A. Objectives
• Stimulate trial purchase: A reduced price or offer of a rebate may attract
attention and stimulate trial purchase. NOTE: Reinforce here the point from
Chapter 2 that brand promotion cannot stimulate trial purchase of a mature
product category (for example, coffee or automobile tires). It can only
stimulate trial use of a new brand in mature product categories. In new
product categories, stimulating trial use of the product category is a legitimate
objective.
• Stimulate repeat purchases: In-package coupons good for the next purchase,
or the accumulation of points with repeated purchases, can keep consumers
loyal to a particular brand. Frequency “points” programs encourage repeat
purchases as well.
• Stimulate larger purchases: Price reductions or two-for-one sales can
motivate consumers to stock up on a brand, thus allowing firms to reduce
inventory or increase cash flow.
• Introduce a new brand: Because sales promotion can attract attention and
motivate trial purchase, it is commonly used for introducing a new brand.
• Combat or disrupt competitors’ strategies: Because sales promotions often
motivate consumers to buy in larger quantities or try new brands, they can be
used to disrupt competitors’ marketing strategies.
• Contribute to integrated marketing communication (IMC): In conjunction
with other programs being carried out by a firm, sales promotion can add yet
another type of communication to the mix by suggesting an additional value
with price reductions, premiums, or the chance to win a prize.
Chapter 11: Sales Promotion and Point of Purchase ❖ 6
B. Techniques
See text Exhibit 11.3 for spending across sales promotion techniques and point-of-
purchase (POP).
1. Coupons
A coupon entitles a buyer to a reduction in price for a brand. Coupons are the
oldest and most widely used form of sales promotion. Annually, about 350 billion
coupons are distributed to American consumers, with redemption rates ranging
from 2 percent for gum purchases to nearly 45 percent for disposable-diaper
purchases.
Advantages of coupons:
• A coupon makes it possible to give a discount to a price-sensitive
consumer while still selling the product at full price to other consumers.
• The coupon-redeeming customer is often a competitive-brand user, so the
coupon can induce brand switching.
• A manufacturer can control the timing and distribution of coupons.
• A coupon is an excellent method of stimulating repeat purchases. Once a
consumer has been attracted to a brand, an in-package coupon can induce
repeat purchase.
• Coupons can get regular users to trade up within a brand array.
The use of coupons also has problems:
• While coupon price incentives and the timing of distribution can be
controlled by a marketer, the timing of redemption cannot.
• Heavy redemption by regular brand buyers simply reduces profits.
• There are costs for production and distribution and for retailer and
manufacturer handling.
• Fraud is a chronic and serious problem in the couponing process.
2. Price-Off Deals
A price-off deal offers a consumer cents or even dollars off merchandise at the
point of purchase through specially marked packages. The typical price-off deal is
a 10 to 25 percent price reduction. The reduction is taken from the manufacturer’s
profit margin rather than the retailer’s. Price-off promotions can create inventory
and pricing problems for retailers. Also, most price-off deals are snapped up by
regular customers, so the retailer doesn’t benefit from new business.
3. Premiums and Advertising Specialties
Premiums are items offered free, or at a reduced price, with the purchase of
another item. There are two options:
Chapter 11: Sales Promotion and Point of Purchase ❖ 7
• A free premium provides consumers with an item at no charge; the item
is either included in the package of a purchased item or mailed to the
• A self-liquidating premium requires a consumer to pay most or all of the
cost of the premium. Cigarette brands, including Camel and Marlboro,
have their own catalog of items from which consumers can order brand–
logo products.
• Advertising specialties have three defining elements:
• They contain a promotional message, including the marketer’s logo.
• The item is useful.
• The item is given freely, as a gift from the sponsor.
4. Contests and Sweepstakes
Contests and sweepstakes can draw attention to a brand like no other sales
promotion technique.
• A contest has consumers compete for prizes based on skill or ability.
• A sweepstakes is a promotion in which winners are determined purely by
chance. Consumers need only to enter their names in the sweepstakes as a
criterion for winning.
Contests and sweepstakes create excitement and generate interest, but the
problems are substantial. Primary among the problems are the regulations and
restrictions on such promotions. Another problem is that the game itself may
become the consumer’s primary focus, while the brand becomes secondary.
The final problem with contests and sweepstakes relates to the IMC effort a firm
may be attempting: it is hard to get any message across in the context of a game.
5. Sampling and Trial Offers
Sampling is a technique designed to provide a consumer with a trial opportunity.
• A recent survey shows that consumers are favorable toward sampling: 43
percent indicate they would switch brands if they liked the sample being
offered.
• Six techniques are used: in-store sampling, door-to-door sampling, mail
sampling, newspaper sampling, on-package sampling, and mobile
sampling, which is carried out by logo-emblazoned vehicles that dispense
samples, coupons, and premiums to consumers at malls, shopping centers,
fairgrounds, and recreational areas.
• Sampling is useful for new products but should not be limited to new
products.
• Trial offers have the same goal as sampling—to induce consumer trial
use of a brand—but are used for more expensive items.
Chapter 11: Sales Promotion and Point of Purchase ❖ 9
broadcasts are common sales promotion traffic builders.
B. Techniques: Trade Market
1. Incentives. Incentives to members of the trade include a variety of tactics not
unlike those used in the consumer market.
• Awards in the form of travel, gifts, or cash bonuses can induce retailers
2. Allowances. Various allowances are offered to retailers and wholesalers with
the purpose of increasing the attention given to a firm’s brands.
• Merchandise allowances, in the form of free products packed with
regular shipments, are payments to the trade for setting up and maintaining
displays.
• Shelf space is in such high demand, especially in supermarkets, that
manufacturers are making direct cash payments, known as slotting fees, to
induce food chains to stock an item.
• Bill-back allowances provide retailers a monetary incentive for featuring
a marketer’s brand in advertising or in-store displays.
• Off-invoice allowances involve the marketer allowing wholesalers and
retailers to deduct a set amount from the invoice they receive for
merchandise.
3. Sales Training. An increasingly popular trade promotion is to provide
training for retail store personnel. A popular method for getting sales-training
4. Co-op Advertising. As we have seen previously, cooperative advertising
refers to joint advertising efforts between retailers and manufacturers. The
C. Techniques: Business Market
1. Trade Shows. Trade shows are events where several related products from
many manufacturers are displayed and demonstrated to members of the trade.
Chapter 11: Sales Promotion and Point of Purchase ❖ 11
• Research indicates that 70 percent of all brand selections involve some final
• P-O-P requires careful coordination with the sales force.
A. P-O-P Objectives
• Draw consumers’ attention to a brand in the retail setting.
• Stimulate trial use by users of competitive brands.
B. P-O-P Advertising Formats
There are two major formats:
• Short-term promotional displays are used for six months or less.
• Permanent long-term displays are used for more than six months.
The various types of displays within these two categories are defined in text
Exhibit 11.5.
C. P-O-P for Trade and Business Buyers
• Product displays and information sheets often encourage retailers to support
one distributor or manufacturer’s brand over another.
• P-O-P can help win precious shelf space and exposure in a retail setting.
• From a retailer’s perspective, a P-O-P display should be designed to draw
attention to a brand, increase turnover, and possibly distribute coupons or
sweepstakes entry forms.
• In an attempt to combat losing business to online shopping, retailers are trying
to enliven the retail environment, and point-of-purchase displays are part of
the strategy.
VI. Support Media
PPT 11-17, 11-18
Support media include outdoor signage and billboard advertising, transit and aerial
advertising, directory advertising, and packaging. Support media are used to reinforce a
message being delivered by some other media vehicle. They can be especially productive
when used to deliver a message near the time or place where consumers are actually
contemplating product selections.