off-season buying, encouraging stocking of related items, offsetting competitive pro-
motions, building brand loyalty, and gaining entry into new retail outlets. For the
sales force, objectives include encouraging support of a new product or model, en-
couraging more prospecting, and stimulating off-season sales.^53 See the Marketing
Memo “Sales Promotions as Brand Builders.”Selecting Consumer-Promotion Tools
The promotion planner should take into account the type of market, sales-promotion
objectives, competitive conditions, and each tool’s cost effectiveness.
The main consumer-promotion tools are summarized in Table 5.9. We can dis-
tinguish between manufacturer promotionsandretailer promotions. The former are il-
lustrated by the auto industry’s frequent use of rebates, gifts to motivate test-drives
and purchases, and high-value trade-in credit. The latter include price cuts, feature
advertising, retailer coupons, and retailer contests or premiums. We can also distin-
guish between sales-promotion tools that are “consumer-franchise building,” which
reinforce the consumer’s brand understanding, and those that are not. The former im-
part a selling message along with the deal, as in the case of free samples, coupons
when they include a selling message, and premiums when they are related to the
product. Sales-promotion tools that are not consumer-franchise building include price-
off packs, consumer premiums not related to a product, contests and sweepstakes,
consumer refund offers, and trade allowances.
Sales promotion seems most effective when used together with advertising. 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 percent; when
combined with feature advertising and a point-of-purchase display, sales volume in-
creased 24 percent.^54
Many large companies have a sales-promotion manager whose job is to help brand
managers choose the right promotional tool. The following example shows how one
firm determined the appropriate tool:A firm launched a new product and achieved a 20 percent market share
within six months. Its penetration rate (the percentage of the target market
that purchased the brand at least once) is 40 percent. Its repurchase rate (the
percentage of first-time triers who repurchased the brand one or more times)
is 10 percent. This firm needs to create more loyal users. An in-pack coupon
would be appropriate to build repeat purchase. But if the repurchase rate has
been high, say 50 percent, then the company should try to attract more new
triers. Here a mailed coupon might be appropriate.Selecting Trade-Promotion Tools
Manufacturers use a number of trade-promotion tools (Table 5.10). Surprisingly, a
higher proportion of the promotion pie is devoted to trade-promotion tools (46.9 per-
cent) than to consumer promotion (27.9 percent), with media advertising capturing
the remaining 25.2 percent. Manufacturers award money to the trade for four rea-
sons:- To persuade the retailer or wholesaler to carry the brand:Shelf space is so scarce
that manufacturers often have to offer prices off, allowances, buyback guar-
antees, free goods, or outright payments (called slotting allowances) to get on
the shelf, and once there, to stay on the shelf. - To persuade the retailer or wholesaler to carry more units than the normal amount:
Manufacturers will offer volume allowances to get the trade to carry more in
warehouses and stores. Manufacturers believe the trade will work harder
when they are “loaded” with the manufacturer’s product. - To induce retailers to promote the brand by featuring, display, and price reductions:
Manufacturers might seek an end-of-aisle display, increased shelf facings, or
price reduction stickers and obtain them by offering the retailers allowances
paid on “proof of performance.”
part five
Managing and
Delivering Marketing(^600) Programs
Sales Promotions as
Brand Builders
Building brand awareness is a long-term
process. What a brand does today predicts
what it will do tomorrow. Sales promotions
are short term and temporary, whether they
are a price reduction, a tie-in with another
brand, a coupon, or some other incentive.
Here are some tips on how to make a sales
promotion an effective brand-building tool.
■ Make sure the promotion is justified:A
new store opening, a company an-
niversary, and other kinds of celebra-
tions are all good reasons for running
a promotion. They put the brand name
in the forefront. Celebrating spring or
back-to-school time are not good rea-
sons to run a promotion; they are too
generic.
■ Tie the promotion to a brand’s image:
Birth dates and anniversaries are good.
For example, Häagen-Dazs could run a
promotion on or around July 9 for its
Dulce de Leche ice cream to coincide
with Argentine National Day. (The fla-
vor and name originated in Ar-
gentina.)
■ Look at every promotion both for the
sales job it can do and as a communi-
cations tool:A promotion is one of a
brand’s many voices; it can help build
brand awareness if it says the right
things. For example, Bayer aspirin
could run a coupon promotion, thus
offering a price reduction, and use the
promotion to reinforce the name
Bayer.
Source:Adapted from Jacques Chevron,“Branding
and Promotion: Uneasy Cohabitation,”Brandweek,
September 14, 1998, p. 24.
MARKETING
memo