480 The Marketing Book
They can overcome significant levels of brand
loyalty to ‘poach’ consumers (McAllister and
Totten, 1985).
They are most effective when backed up by
advertising (Bemmaor and Mouchoux, 1991).
Trade promotions help to secure
intermediaries’ enthusiasm and support, and
can help to build or reduce trade inventories
(Hardy, 1986).
Recently, the prejudices against promotions
have begun to lessen. A new wisdom is
emerging which views them not as a ‘bolt-on
extra’, but as an essential and integral part of
the marketing mix, and vital to the process of
building and managing successful brands. Mar-
keting practitioners are making it clear that
although some promotions are purely tactical,
many are central to brand building and market-
ing strategy. The 2000 Promomagazine survey
of practitioners found that promotions formed
part of an integrated communications plan for
over 80 per cent of companies (and for 31 per
cent it formed the core of that plan). Academic
research is also finding evidence of promotion’s
increasingly strategic role (Peattie et al., 1997;
Ailawadiet al., 2001). The emerging wisdom
about sales promotion stresses that:
1 Top brands promote. Looking at promotions
that have won industry awards in recent years,
the client list reads like a selection from the
‘Who’s Who’ of brands and includes
Coca-Cola, PepsiCo, Microsoft, Kellogg’s, Kraft,
Cadbury, Virgin, Budweiser, Southern Comfort,
Britvic, Golden Wonder, St Ivel, Bass, Jacob’s,
Trebor Bassets, Spillers and The Daily
Telegraph.
2 Promotions aren’t necessarily temporary. Nor are
they of purely short-term value. Airline
frequent flier schemes were originally
conceived as temporary, but have gone on to
represent an industry fixture generating at
least $8 billion annually in additional revenues
(plus sales from hotel tie-ins and other
travel-related products). The Miss Pears
Competition ran for over 60 years, and the
2002 Times‘Eat Out for £5’ described itself as
‘not a promotion, but an institution’. The
effects of a promotion can also linger far
beyond its duration. A promotion
communicates to all those consumers who
encounter it, not just those who take
advantage of it, and can therefore play an
important part in brand awareness building.
Goodyear’s German ‘Looking for Winners’
promotion increased turnover in participating
outlets by 25 per cent and boosted general
brand awareness from 12.5 to 30.5 per cent
(Toop, 1992).
3 Promotions have a strategic role. This
complements their more traditional tactical
capabilities. Brand strength can overcome
adversity, as shown by the example of Tylenol’s
recovery following poisoning incidents by
terrorists and the brand’s subsequent
withdrawal. Another aspect of this story is the
role that promotions can play in the
achievement of strategic objectives such as a
brand’s rehabilitation following disaster. The
recovery of Tylenol was a remarkable
testament to the brand’s robustness, but it was
also considerably aided by the 40 million $2.50
coupons issued to reactivate former users.
4 Promotions suit a wide range of markets. The
stronghold of sales promotion reflects its
FMCG origins, and packaged goods in
particular, but their use has spread throughout
a wide range of markets. Promotions can be
found encouraging people to open bank
accounts (especially students), donate to
charity, test drive cars, purchase shares or
submit papers to academic conferences.
5 Promotions can reinforce brand loyalty.
Promotions, particularly price cutting, have
been blamed for the general erosion of brand
loyalty (Papatla and Krishnamurthi, 1996).
Whether increasing promotion is a symptom
or a cause of eroding brand loyalty is open to
debate. What is often overlooked is that
promotions also build brand loyalty, by
providing extra benefits for existing customers
and by encouraging repeat purchases through
devices such as ‘money off next purchase’