6.04 Exemplify sales promotions

Summarize the purpose of sales promotions.

• Sales promotions: All the communications or activities used to stimulate sales other than advertising, public relations or personal selling communications or activities.

• Sales promotions are incentives to encourage the trial and the purchase of a product. For example, coupons are often used to get customers to try new products at a cheaper price.

• Sales promotions can also be used to create awareness of new products and customer loyalty. For example, a car dealership might hold a “try your key” contest to bring people out to look at a new car model.

Classify types of sales promotions.• Trade promotions: Designed to create support from

manufacturers, wholesalers, and retailers for a product. • Promotional allowances: Discounts or cash payments given to

wholesalers or retailers who stock large quantities and encourage sales of a product. For example, a cereal manufacturer may offer a retailer ten cents per case promotional allowance to put towards local promotions if they purchase a certain volume of the product.

• Slotting allowances: Cash premiums paid to retailers to help with the cost of restocking a new product. These premiums are also used to secure the best location for the products on shelves. For example, an end-cap on a grocery aisle provides higher visibility to Doritos.

• Sales force promotions: Awards given to dealers and salespeople who meet or exceed their sales quota. For example, a company may give a salesperson a cash bonus if they meet sales goals.

• Trade shows and conventions: Designed to showcase a manufacturer’s products. Trade shows are used to introduce new products, encourage sales of existing products, and meet contacts.

Consumer promotions: Activities designed to increase sales of a product.

• Coupons: Certificates that provide cash discounts, or money off, on a good or service. For example, Domino’s offers a coupon for “Buy one 1-topping pizza and get a second one for half off”.

• Premiums: Inexpensive items given away at a discount or for free. Premiums are used to establish product loyalty and attract new customers. For example, free gifts with purchase or an ongoing coupon plan.

• Deals: Packages that offer similar products together for a temporary price break. For example, a shampoo and conditioner set sold together for a slightly lower price than if purchased separately.

• Incentives: Contests, games, sweepstakes, or rebates used to create increased sales and excitement about a product. For example, McDonald’s uses their monopoly game to encourage customers to purchase more product.

Consumer promotions: Activities designed to increase sales of a product. (con’t)

• Product samples: Free trial sizes of a product given out to potential customers. Product samples are very helpful in promoting new products as they encourage people to try a new product without the risk of buying it. For example, a package of Crest toothpaste includes a free sample Scope mouthwash.

• Sponsorship: A company pays for the right to promote itself and its products at a location or event. For example, DuPont sponsors a NASCAR racing team.

• Promotional tie-ins (also called cross-promotion and cross-selling campaigns): Activities between two companies who combine efforts and resources to create additional sales for each other. For example, an ice cream retailer offers discounts to customers who come in after a movie and present a ticket stub.

Consumer promotions: Activities designed to increase sales of a

product. (con’t)• Promotional tie-ins (also called cross-promotion and cross-selling

campaigns): Activities between two companies who combine efforts and resources to create additional sales for each other. For example, an ice cream retailer offers discounts to customers who come in after a movie and present a ticket stub.

• Product placement: Involves using a brand-name product in a TV show, movie, or commercial, etc. For example, Warner Brothers featured America Online in its movie “You’ve Got Mail.”

• Loyalty marketing programs (also called frequent buyer programs): Designed to reward customers for continued patronage. For example, many airlines offer frequent flyer miles to customers.

• Point-of-purchase displays: Placed in high-traffic areas of stores and are designed to encourage impulse purchases. For example, drink coolers at check-out lines in grocery stores.