6.04Exemplify 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.