Sales Promotion Strategies 289
promotion(prices off, advertising and display allowances, and free goods), and business-
and sales force promotion(trade shows and conventions, contests for sales reps, and spe-
cialty advertising).
In years past, the advertising-to-sales-promotion ratio was about 60:40. Today, in
many consumer-packaged-goods companies, sales promotion accounts for 65–75 per-
cent of the overall promotional budget. Several factors have contributed to this trend,
particularly in consumer markets.^32 Internal factors include the following: Promotion
is now more accepted by top management as an effective sales tool, more product
managers are qualified to use sales-promotion tools, and product managers are under
greater pressure to increase current sales. External factors include: The number of
brands has increased, competitors use promotions frequently, many brands are seen as
being similar, consumers are more price-oriented, the trade demands more deals from
manufacturers, and advertising efficiency has declined because of rising costs, media
clutter, and legal restraints.
In general, sales promotion seems most effective when used together with adver-
tising. In one study, a price promotion alone produced only a 15 percent increase in
sales volume. When combined with feature advertising, sales volume increased 19 per-
cent; when combined with feature advertising and a point-of-purchase display, sales
volume increased 24 percent.^33
Purpose of Sales Promotion
Sales-promotion tools can be used to achieve a variety of objectives. Sellers use
incentive-type promotions to attract new triers, to reward loyal customers, and to
increase the repurchase rates of occasional users. New triers are of three types—
users of another brand in the same category, users in other categories, and frequent
brand switchers. Sales promotions often attract the brand switchers, because users of
other brands and categories do not always notice or act on a promotion. Brand
switchers are primarily looking for low price, good value, or premiums, so sales pro-
motions are unlikely to turn them into loyal users. Sales promotions used in markets
of high brand similarity produce a high sales response in the short run but little per-
manent gain in market share. In markets of high brand dissimilarity, however, sales
promotions can alter market shares permanently.
One challenge is to balance short- and long-term objectives when combining
advertising and sales promotion. Advertising typically acts to build long-term brand
loyalty, but the question of whether or not sales promotion weakens brand loyalty over
time is subject to different interpretations. Sales promotion, with its incessant prices
off, coupons, deals, and premiums, may devalue the product offering in the buyers’
minds. Therefore, companies need to distinguish between price promotions(which
focus only on price) and added-value promotions(intended to enhance brand image).
Here’s how Toro, a major manufacturer of lawn mowers and snowblowers, used
an added-value promotion to sell its snowblowers in early September: Knowing that
most people would wait to buy until the first snow, Toro offered to include Toro Snow
Insurance, promising a rebate of $50 to each September buyer if it did not snow before
January. This sales promotion did not hurt, and may have helped, Toro’s brand image.
When a brand is price promoted too often, the consumer begins to buy it mainly
when it goes on sale. So there is risk in putting a well-known brand leader on promo-
tion over 30 percent of the time.^34 Kellogg, Kraft, and other market leaders are trying
to return to “pull” marketing by increasing their advertising. They blame the heavy use
of sales promotion for decreasing brand loyalty, increasing consumer price sensitivity,
brand-quality-image dilution, and a focus on short-run marketing planning.