Consumer-Oriented Sales Promotion
Sales Promotion Overview What are Sales Promotions? All of us occasionally delay a purchase until the wanted item “goes on sale.” Sometimes we make an unplanned purchase because of a coupon. Perhaps our loyalty to some brands we use now began with a free sample. If any of these are true for you, then you took advantage of an extra incentive to buy broadly known as “sales promotion.” 1. Sales promotion definition and classifications. More formally, we define sales promotion as any of a variety of techniques designed to offer purchasers an extra inducement to buy in the form of value or benefits beyond those offered by the product being purchased. The examples in the previous paragraph represent a branch of sales promotion directed at consumers. Not surprisingly, this part of sales promotion is referred to as “consumer-oriented sales promotion.” However, extra inducements to buy may be offered at any point of exchange anywhere in a channel of distribution. Exhibit 1 describes these distinctions and shows the names we will use to classify the various sales promotion techniques. In these notes, we will discuss consumer-oriented sales promotion, which itself may be further categorized in terms of who actually makes the promotional offer to consumers. The names under which these promotions get classified can be confusing, so I encourage you to look carefully at Exhibit 1. In these notes I largely adopt the names most commonly used among promotion professionals, which are sometimes not particularly descriptive. For example, promotional offers made by retailers to consumers are called retail promotions, which seem clear enough. But promotional offers made by manufacturers to consumers are not called manufacturer promotions; they’re called consumer promotions – not to be confused with the broader category of promotion I refer to as “consumer-oriented sales promotion.” Again, look carefully at Exhibit 1. Making these sometimes confusing distinctions is more than busywork, however; identification of the source of the promotion also typically identifies who pays for the promotion. While most consumers care little about who funds promotional offers, promotion managers care deeply about such matters. Promotion managers keep a keen eye on what offers competitors make and who pays for them. Moreover, to assure that they receive access to all promotional offers possible, promotion managers want to know what manufacturers and retailers in their channels are offering to other firms. We will
Consumer-Oriented Sales Promotion – page 2 address these issues more fully later in these notes and in the Web Notes on businessoriented sales promotion. Retail Promotions inducements offered by retailers to consumers ConsumerOriented Sales Promotion includes price discounts, retail coupons, double coupons, features, special displays, etc. Consumer Promotions inducements offered by manufacturers to consumers includes manufacturer’s coupons, rebates, premiums, bonus packs, samples, etc. Trade Promotions inducements offered by manufacturers to wholesalers and retailers, or by includes off-invoice discounts, merchandise allowances, promotional allowances, etc. BusinessOriented Sales Promotion Industrial Promotions inducements offered by and to raw materials suppliers component parts manufacturers , and final producers or manufacturers includes off-invoice discounts, merchandise allowances, etc. Business Promotions inducements offered by business product suppliers to any other business or organization includes off-invoice discounts, merchandise allowances, etc. Exhibit 1. Trade and Consumer Promotion in a Distribution Channel 2. Growth of sales promotion. In the past twenty years, all categories of sales promotions have experienced tremendous growth as marketers offering more value to customers has become an increasingly necessary part of overall marketing programs. In fact, as a percentage of total marketing...
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