CHAPTER 18
Sales promotion
SUE PEATTIE and KEN PEATTIE
Introduction
In 1697 Jonathon Holder, a London haber-
dasher, decided to offer customers spending
over a guinea in his shop a free stock and price
list. His pioneering decision to offer his custom-
ers ‘something extra’ was not universally wel-
comed. The newspapers of the day condemned
this sales promotion as ‘a dangerous innova-
tion’ and one which, ‘would be destructive to
trade, if shopkeepers lavished so much of their
capital on printing useless bills’. Over 300 years
later, trade still flourishes and so do sales
promotions, which now account for more ‘capi-
tal’ than any element of marketing communica-
tions except selling. During 2000, promotional
expenditure in the USA (excluding discounting
programmes) exceeded $100 billion for the first
time, according to industry figures. Despite
sales promotion’s growing importance, some-
thing of the scepticism that Mr Holder encoun-
tered lives on. In the study and practice of
marketing, sales promotion has always been
overshadowed by the more glamourous world
of advertising. This situation is now changing,
with sales promotion beginning to attract the
academic study and practitioner scrutiny that
its cost and increasingly strategic role surely
demands.
Sales promotion defined
Sales promotion is frequently defined in terms
of what it is not, typically as those marketing
communications activities which do not fall
into the categories of advertising, selling or
public relations. This is not very helpful, but
definitions trying to explain what this encom-
passes are often flawed, by failing to embrace
all of the marketing tools regarded as sales
promotions in practice. We can define sales
promotions as ‘marketing activities usually
specific to a time period, place or customer
group, which encourage a direct response from
consumers or marketing intermediaries,
through the offer of additional benefits’.
The three key elements of this definition
are that sales promotions are:1 Non-standard. Promotions are usually
temporary, and may be limited to certain
customer groups (such as airline frequent flier
schemes) or specific to a particular distribution
channel (as in ‘tailor-made’ promotions
involving a producer and a single retailer).
2 Response orientated. Promotions seek a direct
response from customers, or those who deal
with customers on the producer’s behalf (see
Figure 18.1). The direct response sought is not