271
See also: Understanding the market 234–41 ■ Creating a brand 258–63 ■
Generating buzz 274–75 ■ Marketing mix 280–83M
arketers often use the
offer of a free gift, prize,
discount, or bonus to
sway customers into buying
merchandise. This strategy is
known as “incentive marketing” or
“sales promotion.” It is commonly
used to launch a new product,
regenerate interest when sales
growth is flat, or to help build the
company’s reputation or brand.
US industrialist William Wrigley
was a pioneer of incentives aimed
at encouraging purchases. In 1892
he started marketing his chewing
gum offering gifts, or “premiums,”
to successfully woo customers
away from the established brands.
It was a tactic he returned to often
to stimulate sales growth.Push and pull
In modern marketing terminology,
Wrigley used “pull” incentives:
gifts or price reductions that
stimulate consumer demand, so
that retailers are forced to stock
more of the product. Marketers can
also use “push” incentives: these are
compensations targeted toward theretailer or wholesaler, so that they
will, in turn, direct consumer
attention toward certain products.
Both push and pull incentives
can cause a short-term lift in sales,
but over time their impact wears off;
promotion fatigue sets in, or the
incentives become too expensive.
The success of a promotion is
measured by looking at return on
investment (ROI). When this begins
to fall, or the company’s reputation
suffers from a surfeit of promotions,
the strategy is no longer working. ■SUCCESSFUL SELLING
EVERYBODY LIKES
SOMETHING EXTRA
FOR NOTHING
PROMOTIONS AND INCENTIVES
IN CONTEXT
FOCUS
Marketing incentives
KEY DATES
1895 Postum Cereals in the
US introduces “penny-off”
coupons to promote its cereal.
1912 The offer of “a prize in
every box” is used to tempt
US customers to buy Cracker
Jack popcorn.
1949 US grain producer
Pillsbury devises a marketing
campaign based around a
product-linked cooking
competition.
1975 The “Pepsi Challenge
Taste Test” helps the soft-
drink brand outsell Coca-Cola
in supermarket sales.
1992 Electrical goods maker
Hoover offers a free flight to
any UK customer spending
$160 (£100) on a product.
The offer is so popular that it
costs the company almost
$79 (£50) million.
One thing I’ve learned is that
you can’t push technology.
It has to be pulled.
Bill Ford
US industrialist (1957–)