1. Chapter 12
Promotion Through the
Marketing Channels

2. Major Topics for Promotion through Marketing Channels
Marketing Communication Tools
Promotion Objectives
Push Promotion and Pull Promotion**
1) Push/Pull Ratio Considerations
2) Push/Pull and Reseller Support
Push Promotion
Research Findings on Push Promotion*
Pull Promotion

3. 1. Marketing Communication Tools
Advertising
Direct Marketing
Sales Promotion*
Publicity/Public Relations
Personal Selling**
Another categorization: monetary versus nonmonetary; behavior-based promotion versus outcome-based promotion
cf) Another Categorizations of Sales Promotion

4. Key Issue: Channel Member Support12
Key Issue: Channel Member Support
Why is channel member support program one of the major tools of the manufacturer’s promotional mix?
Most products and services are not sold
directly to final customers.

5. 2. Promotional Objectives
Stimulating (more) sales
Differentiating product/service offerings
Sharing information
Accentuating a market offering’s value
Stabilizing seasonal demand
These are all for Consumer Promotions
For Trade (Channel) Promotion
More Reseller Compliance (“More Effort”)
More Reseller Representation (“Right Effort”)

6. 3. Pull Strategy & Push Strategy12
Pull Strategy
Push Strategy
Manufacturer builds strong
consumer demand for a
product to force members
to automatically promote
the manufacturer’s product
because it is in their obvious
self-interest to do so.
Manufacturer develops mutual effort & cooperation in the development & implementation of
promotional strategies by working directly with members to develop strong & viable promotional support.

7. Promotional Strategies in Channels**12
Pull Strategy
Push Strategy
Manufacturer
Manufacturer 1* 1 3
Channel members
Channel members 2 2 3
Final users
(consumer or industrial)
Final users
(consumer or industrial)
*Numbers indicate sequence
of flows
Promotion flow
Negotiation flow
Product flow

8. Push/Pull Ratio Considerations*
Promotion Objectives
Budgetary constraints
Nature of the product offering
Product life cycle
Product valuation
Relative Power in Channel

9. 4. Push Promotion: Promotion Through Channel Members12
Strategies that are part
of an overall
program of manufacturer
support of channel
member needs
Strategies that involve
channel members
&
Stand a higher probability of being
favorably received by the channel members

10. Basic Push Promotional Strategies
Cooperative Advertising
Promotional Allowances
Slotting Fees
Displays & Selling Aids
In-store Promotions
Contests & Incentives*
Special Promotional Deals & Merchandising Campaigns
 All involves “money” to Resellers

11. Cooperative Advertising12
Typical
Strategy:
A sharing in the cost on a 50–50
basis up to some percentage of
the retailer’s purchases from
the manufacturer
Effective administration by
manufacturer is necessary to
avoid abuses & to help secure
cooperation from channel members
2. Channel manager must be sensitive
to channel members’ primary concern
about this strategy
Administration:

12. Promotional Allowances12
Manufacturer offers channel member
a direct cash payment or a certain
percentage of the purchases on
particular products
Typical
Strategy:
Administration:
Manufacturer should conduct
research to determine whether it
is getting its money’s worth in
terms of retailer cooperation and
follow-through

13. Slotting Fees 12 Typical Strategy: Payments by manufacturers to
persuade channel members, especially
retailers, to stock, display, and
support new products
Administration:
Joint sponsorship of research
between retailers and manufacturers
on effects of slotting fees on various
topics could help alleviate conflict
* Antitrust implication

14. Slotting Fees Thousands of new grocery products per year
Grocery stores often stock thousand items
There is room for only about 5% of 15,000 new grocery products each year.
Slotting fees help ensure grocer profits on a product, help balance risk of trying unknown product.
Grocery is a narrow margin business, slotting fees can represent a significant revenue source.

15. Displays & Selling Aids12
Typical
Strategy:
Include point-of-purchase (POP)
displays, dealer identification signs,
promotional kits, special in-store
displays, & mailing pieces
Administration:
Channel manager should make the
effort to see whether the firm’s
selling aids and displays are serving
any useful purpose

16. In-Store Promotions 12 Typical Strategy:
Short-term events designed to create
added interest and excitement
for the manufacturer’s products
Administration:
The planning of a successful
in-store promotion should always
include considerations of the
potential benefits for the
retailers involved.

17. Contests & Incentives 12 Typical Strategy:
Techniques that manufacturers use
to stimulate channel member sales
efforts for their products
Manufacturer should put much effort into determining the view of channel members
toward this form of promotion
Administration:

18. Special Promotional Deals & Merchandising Campaigns12
Include a variety of push-type
promotional deals such as discounts
to channel members to encourage
them to order more products
Typical
Strategy:
Administration:
Manufacturers need to develop
carefully planned strategies that are
based on knowledge of channel
member needs and that take a
long-term perspective on promotion
through the marketing channel

19. “Kinder & Gentler” Push Promotion Toos12
“Kinder & Gentler” Push Promotion Toos
Training Programs
Quota Specification
Missionary Selling*
Trade Shows
 Nonmonetary Promotions

20. Training Programs 12
Wholesale: Help wholesalers’ knowledge, selling techniques,
and skill in counseling customers they call on
Retail: Help retailer’s product knowledge, selling techniques,
and counseling customers on product usage
Pro
• Manufacturers can
assist wholesalers
& retailers by helping
to offset the cost.
Con
• Distributors have often little time for training.

21. Quota Specification 12
Sales volumes that manufacturers specify for channel
members to generate during a certain time period
Pros
• Can amount to a
substantial sum and can make a major difference in the dealers’ overall profit picture
• Can be effective in improving channel member promotional support
Cons
• If presented in a coercive fashion, it can produce ill will and conflict rather than support
• Channel members may ignore quota if manufacturer’s line does not make up an important part of the member’s product mix

22. Missionary Selling 12
Manufacturer’s salespeople who are specially assigned
to supplement the selling activities of channel members
Pros
• A useful strategy when channel members lack sales capacity or competence to handle tasks assigned to them
• Useful when channel members desire this service
Cons
• Expensive
• Can cause conflicts in the channel
• Some members view these salespeople as intruding on the time of their own sales force

23. Trade Shows Annual events organized by associations in12
Annual events organized by associations in
particular industries
Pros
• Opportunity for manufacturer to sell existing & new channel members substantial quantities of new products face-to-face
• A chance for manufacturers to socialize with channel members
• Creates a sense of pride and belonging in channel members that sell its products

24. Promotional Strategies & Channel Cooperation
Major Factors Driving the Extent of a Reseller’s Support for a Manufacturer’s Promotion: Big Issue Now**
Item importance
Promotion elasticity
Manufacturer’s brand support
Manufacturer’s reputation
Promotion wearout
**: My Research Findings

25. 5. Push Promotion Research Findings*12
5. Push Promotion Research Findings* 1.
Ad hoc, quick-fix, and frequently offered
push promotions do not foster high levels
of channel member support on a
consistent basis.

26. Push Promotion Research Findings12 2.
Push promotions should be viewed as
part of strategic channel management
rather than as mere tactical actions.

27. Push Promotion Research Findings12 3.
Manufacturers should study channel
members’ needs carefully before
launching major push promotions.*

28. Push Promotion Research Findings12 4.
Post-promotion research is needed if
manufacturers expect to make steady
progress in improving the
effectiveness of push promotions.*

29. 6. Pull Promotion* Advertising (to consumers):
Important for demand generation purpose
Market pull through strong brand equity
Sales Promotion (to consumers)
Can be done by a Manufacturer and/or a Retailer

30. Consumer Sales Promotion
Consumer Promotion Tools
This CTR relates to the discussion on pp
Consumer Sales Promotion
Short-Term Incentives to Encourage Purchase or Sales of a Product or Service.
Consumer-Promotion Objectives
Consumer-Promotion Tools
Samples
Advertising
Specialties
Entice Consumers to
Try a New Product
Consumer Promotion Tools
A number of tools are used by marketers to reach consumers directly, including:
Samples. Samples offer consumers a trial amount of a product.
Coupons. Coupons give buyers a savings on specified products.
Rebates. Rebates consist of cash back after the purchase.
Price Packs. Price packs offer reductions in price for special combinations of products or quantities of the product.
Premiums. Premiums are goods offered free or at low cost as an incentive to buy the product.
Advertising Specialties. Advertising specialties are useful items imprinted with the advertiser’s name or logo.
Patronage Rewards. Patronage rewards are cash or prizes offered for the regular use of the product or service.
Point-of-Purchase. Point-of-purchase promotions include displays and demonstrations at the retail level.
Contests, Sweepstakes, and Games. These give consumers a chance to win something and draw attention to the product.
Coupons
Lure Customers Away
From Competitors’ Products
Patronage Rewards
Patronage Rewards
Cash Refunds
Get Consumers to “Load Up’
on a Mature Product
Contests
Price Packs
Premium: free goods
Rebates
Hold & Reward Loyal
Customers
Premiums
Games
Consumer Relationship
Building
Point-of-Purchase
Displays

31. An Example: Car Sales Channel*
Push Promotion by a Maker:
Incentive to Dealers
Push Promotion by a Dealer:
Dealer Promotion
Ford
Ford
Dealer*
Car
Buyer
Pull Promotion: Consumer
Promotion (Cash back) Advertising
* Pass-through issue