18

C H A P T E R

Consumer and
Trade
Sales Promotion

McGraw-Hill/Irwin

2007 The McGraw-Hill Companies, Inc. All rights reserved.

Learning Objectives
After studying this chapter, you should be able to:

Explain the role and significance of sales promotion in the

marketing communications mix.

Understand why sales promotion expenditures account for
a significant portion of many firms marketing
communications budgets.
Discuss the objectives and techniques of consumer sales
promotion.
Discuss the objectives and techniques of trade sales
promotion.
Explain the limitations of sales promotion.
Realize how deceptive and fraudulent sales promotion
victimizes both consumers and marketers.

Bearden Marketing 5th Ed

18-2

2007 The McGraw-Hill Companies, Inc. All rights reserved.

McDonalds
McDonalds, long a leading user of
special promotions to attract
consumers to its stores, made
industry headlines with its Monopoly
game promotion in 2004.
McDonalds teamed with WildTangent,
a major manufacturer of online
games, which produced online demo
games modified to include McDonalds
product placements.
McDonalds then used the games as
prizes in its Monopoly contest, and
promotion partner WildTangent
benefited from the introduction of its
games to millions of prospective game
customers.
Bearden Marketing 5th Ed

18-3

2007 The McGraw-Hill Companies, Inc. All rights reserved.

The Role of Sales Promotion

Sales
Promotion

Consists of media and nonmedia

marketing communications employed
for a predetermined, limited time to
stimulate trial, increase consumer
demand, or improve product
availability.
Consumer sales promotion is
directed at consumers.

Trade sales promotion is directed at

resellers.
Bearden Marketing 5th Ed

18-4

2007 The McGraw-Hill Companies, Inc. All rights reserved.

Sales Promotion
Sales
Promotion
Expenditures

Consumer
Factors

The Significance
of
Sales Promotion
Increased Retail
Power

Bearden Marketing 5th Ed

Impact of
Technology

18-5

2007 The McGraw-Hill Companies, Inc. All rights reserved.

10 Commandments of Sale Promotion

1. Set specific objectives. Undisciplined, undirected creative
work is a waste of time and resources.
2. Know how basic promotion techniques work. A
sweepstakes shouldnt be used to encourage multiple
purchases or a refund to get new customers. A price-off deal
cant reverse a brands downward sales trend.
3. Use simple, attention-getting copy. Most promotions are
built around a simple idea: save 75 cents. Emphasize the
idea, and dont try to be cute.
4. Use contemporary, easy-to-track graphics. Dont expect
to fit 500 words and 20 illustrations into a quarter-page,
freestanding insert.
5. Clearly communicate the concept. Words and graphics
must work together to get the message across.
Bearden Marketing 5th Ed

18-6

2007 The McGraw-Hill Companies, Inc. All rights reserved.

10 Commandments of Sale Promotion

6. Reinforce the brands advertising message. Tie promotions
to the brands ad campaign.
7. Support the brands positioning and image. This is
especially important for image-sensitive brands and categories,
like family-oriented Kraft.
8. Coordinate promotional efforts with other marketing
plans. Be sure to coordinate schedules and plans. A consumer
promotion should occur simultaneously with a trade promotion; a
free-sample promotion should be timed in conjunction with the
introduction of a new line.
9. Know the media you work through. Determine which media
will work best. Should samples be distributed in stores, door-todoor, or through direct mail? Does the promotion need
newspaper or magazine support?
10. Involve the trade. Build relationships with key resellers.
Bearden Marketing 5th Ed

18-7

2007 The McGraw-Hill Companies, Inc. All rights reserved.

Consumer Sales Promotion

Objectives of Consumer Sales Promotion:

Stimulate trial
Increase consumer inventory and consumption
Encourage repurchase
Neutralize competitors
Increase sales of complementary products
Stimulate impulse purchasing
Allow flexible pricing

Bearden Marketing 5th Ed

18-8

2007 The McGraw-Hill Companies, Inc. All rights reserved.

Consumer Sales Promotion Techniques

Price Deals

Coupons

A price deal is a temporary reduction

in the price of a product. There are
two primary types of price deals:
cents-off deals and price-pack deals.
A coupon is typically a printed
certificate giving the bearer a stated
price reduction or special value on a
specific product, generally for a
specific period.
more

Bearden Marketing 5th Ed

18-9

2007 The McGraw-Hill Companies, Inc. All rights reserved.

Consumer Sales Promotion Techniques

Rebates

CrossPromotions

A rebate is a cash reimbursement to

a buyer for purchasing a product.
The consumer must mail a rebate
form, the purchase receipt, and proof
of purchase to the manufacturer.
A cross-promotion (tie-in), is the
collaboration of two or more firms in
a sales promotion. Crosspromotions
enhance the communications effort
of all the participating firms.
more

Bearden Marketing 5th Ed

18-10

2007 The McGraw-Hill Companies, Inc. All rights reserved.

Consumer Sales Promotion Techniques

Contests,
Games

Premiums

A contest offers prizes based on the

skill of contestants. A sweepstakes
offers prizes based on a chance
drawing of participants names.
Games are similar to sweepstakes,
but they cover a longer period.
An item given free or at a bargain
price to encourage the consumer to
buy is called a premium.
more

Bearden Marketing 5th Ed

18-11

2007 The McGraw-Hill Companies, Inc. All rights reserved.

Consumer Sales Promotion Techniques

Sampling

Advertising
Specialities

Bearden Marketing 5th Ed

A sample is a small size of a

product made available to
prospective purchasers, usually free
of charge.
An advertising specialty, also
called a promotional product, is an
item of useful or interesting
merchandise given away free of
charge and typically carrying an
imprinted name or message.

18-12

2007 The McGraw-Hill Companies, Inc. All rights reserved.

Trade Sales Promotion

Objectives of Trade Sales Promotion:

Gain/maintain distribution
Influence resellers to promote product
Influence resellers to offer price discount
Increase reseller inventory
Defend against competitors
Avoid reduction of normal prices

Bearden Marketing 5th Ed

18-13

2007 The McGraw-Hill Companies, Inc. All rights reserved.

Trade Sales Promotion Techniques

Trade
Allowances

Dealer
Loaders

Trade allowances are short-term

special allowances, discounts, or
deals granted to resellers as an
incentive to stock, feature, or in some
way participate in the cooperative
promotion of a product.
A dealer loader is a premium given
to a reseller to encourage
development of a special display or
product offering.
more

Bearden Marketing 5th Ed

18-14

2007 The McGraw-Hill Companies, Inc. All rights reserved.

Trade Sales Promotion Techniques

Trade
Contests

A trade contest typically associates

prizes with sales of the sponsors
product. Trade contests generate
interest, which makes them useful for
motivating resellers.

Point-ofPurchase
Display

Point-of-purchase displays are

generally used at the retail level to
call customer attention to a featured
product.
more

Bearden Marketing 5th Ed

18-15

2007 The McGraw-Hill Companies, Inc. All rights reserved.

Trade Sales Promotion Techniques

Trade Shows

Training
Programs

A trade show is a periodic, semipublic event at which suppliers rent

booths to display products and
provide information to potential
buyers.
Some manufacturers sponsor or pay
for training programs for customer
employees.

more
Bearden Marketing 5th Ed

18-16

2007 The McGraw-Hill Companies, Inc. All rights reserved.

Trade Sales Promotion Techniques

Push Money

Bearden Marketing 5th Ed

Push money, also called spiffs (for

special promotional products
incentive funds), is what a
manufacturer pays retail salespeople to encourage them to promote
its products over competitive brands.

18-17

2007 The McGraw-Hill Companies, Inc. All rights reserved.

Limitations of Sales Promotions

1. It typically cannot reverse a genuine declining sales
trend.
2. Marketers cannot reasonably expect sales promotion
to convert rejection of an inferior product into
acceptance.
3. Sales promotion may even weaken the brand image.
4. Sales promotion has also been blamed for
encouraging competitive retaliation.
5. Short-term volume gain at the sacrifice of profits.
Bearden Marketing 5th Ed

18-18

2007 The McGraw-Hill Companies, Inc. All rights reserved.

Ethical and Legal Issues

Fake
Storefront

A scam artist rents space cheap, sets up a

store, then starts sending in coupons to
manufacturers for payment. Soon the
stores shelves are bare, but the owner is
still sending in coupons obtained illegally.

Stuffing the
Ballot Box

A retailer legitimately obtains cash from

clearinghouses and manufacturers for
coupons handed in by shoppers, but
boosts the take illegally by sending in extra
coupons purchased at steep discounts
from various sources.
more

Bearden Marketing 5th Ed

18-19

2007 The McGraw-Hill Companies, Inc. All rights reserved.

Ethical and Legal Issues

Playing the
Middleman

An ambitious operator makes money

supplying other operatorscollecting
coupons by the pound and selling them to
retailers, buying and selling proofs of
purchase, or counterfeiting coupons and
proofs of purchase.

Redemption
Scam

Manufacturers offer big cash rebates on

large items to shoppers who mail in forms,
together with proofs of purchase
receipts, labels, or box tops. A con artist
uses the rebate forms and proofs
of purchase, real or counterfeit, to illicitly
collect refunds without buying products.

Bearden Marketing 5th Ed

18-20

2007 The McGraw-Hill Companies, Inc. All rights reserved.

Summary
After studying this chapter, you should be able to:

Explain the role and significance of sales promotion in the

marketing communications mix.

Understand why sales promotion expenditures account for a
significant portion of many firms marketing communications
budgets.
Discuss the objectives and techniques of consumer sales
promotion.
Discuss the objectives and techniques of trade sales
promotion.
Explain the limitations of sales promotion.
Realize how deceptive and fraudulent sales promotion
victimizes both consumers and marketers.

Bearden Marketing 5th Ed

18-21

2007 The McGraw-Hill Companies, Inc. All rights reserved.