Chapter 10 – Integrated Marketing Communications
- Learn about different types of sales promotions companies use to get customers to buy their products.
- Understand the different types of sales promotions companies use with their business customers.
- Understand why sales promotions have become such an integral part of an organization’s promotion mix.
- Differentiate between push and pull strategies.
Sales promotions are activities that supplement a company’s advertising, public relations, and professional selling efforts. They create incentives for customers to buy products more quickly and make larger purchases. Sales promotions are often temporary, but when the economy is weak, sales promotions are used more frequently by companies as they can deliver revenue quickly. Table 10.1 recaps the different types of sales promotions designed for both consumers and businesses.
|Business-to-Consumer Sales Promotions||Business-to-Business Sales Promotions|
Trade shows and conventions
Sweepstakes or contests
|Premiums||Trade and advertising allowances|
|Loyalty programs||Free merchandise|
|Point-of-purchase displays||Push money|
Consumer Sales Promotions
Samples, coupons, premiums, contests, and rebates are examples of consumer sales promotions. Companies use sales promotion to temporarily increase sales. Some types are used to encourage trial and build awareness.
A free sample allows consumers to try a small amount of a product with no risk to them so that they are more likely to purchase it. The tactic encourages trial and builds awareness. Although sampling is expensive, it is very effective for food products. People taste the product, and the person providing the sample tells them about the product and mentions any special prices for it. Apps use a sampling by offering a basic version of the app for consumers to download and try.
In many retail grocery stores, coupons are given to consumers with the samples. Coupons provide an immediate price reduction off an item. The coupon’s cost is reimbursed to the retailer, by the manufacturer. The retailer gets a handling fee for accepting coupons.
Consumers also use coupons from the paper or e-flyers. Many stores offer online flyers, coupons and price reductions if consumers sign up for their app or use their loyalty cards.
In 2020, 73% of shoppers used digital coupons, comparable to the percentage using paper coupons (71%). However, looking at demographic factors such as age can give marketers a better understanding of which customers tend to use digital versus paper coupons. For example, age seems to play a critical part in digital coupon use: 88% of Millennials used digital coupons and discounts versus 64% of Baby Boomers. While 93% of Millennials use their mobile device to compare prices while shopping for an item in a brick-and-mortar store, Baby Boomers are less likely to do so (CouponFollow Team, 2021).
Other sales promotions may be conducted online and include incentives such as free items, free shipping, coupons, and sweepstakes. Amazon Prime is a well-known loyalty program where users get free shipping as well as many other benefits. Some companies have found that the response they get to their online sales promotions is better than the response they get to traditional sales promotions, although that depends on the specific product or service being offered and the retailer’s brand image.
Another very popular sales promotion for consumers is a premium. A premium is a product or discount that consumers can obtain for free from buying the product (e.g. for a toy such as in Figure 10.6) or by submitting proof of purchase (sales receipt or part of package) to the company (e.g. for coupons such as in Figure 10.7). The purpose of a premium is to motivate you to buy a product many times.
Contests or sweepstakes also attract people. Contests are sales promotions people enter or participate in order to have a chance to win a prize. As with other sales promotion tools, the idea is to get you to buy a product and more specifically to make repeat purchases. One of the most iconic promotions was offered by Tim Hortons. Since its creation in 1986, the original annual Roll-Up-The-Rim promotion was adored by millions of Canadians (Powell, 2011). It was launched as a way to reward millions of Canadians for their loyalty to the brand and to boost sales. With the purchase of any sized drink, the customer had a chance to win prizes that range from free drinks to cars. The unusual placement of contest information in the rim of the paper cup was done to create awareness of the contest at point of sale and minimized costs (Figure 10.8).
In March 2019, Tim Hortons unveiled its first point-based loyalty program, Tims Rewards. The first iteration of the program offered customers a points card for a free coffee, tea or donut earned after the customers’ seventh purchase (Abedi, 2019). This was followed by a Tims Rewards app that customers could use to scan and track their purchases. Tim Hortons did not abandon the Roll-Up-the-Win contest altogether. In 2020, participation in the Roll to Win contest moved from the rim of the cup to the Tims Rewards card and app.
Loyalty programs are sales promotions designed to get repeat business. Loyalty programs include things such as frequent flier programs, hotel programs, and shopping cards for grocery stores, drugstores, and restaurants. Sometimes point systems are used in conjunction with loyalty programs. After you accumulate so many miles or points, an airline company might provide you with a special incentive such as a free flight, free hotel room, or free sandwich. Many loyalty programs, such as Aeroplan or Airmiles have partners to give consumers more ways to accumulate and use miles and points.
Rebates are popular with both consumers and the manufacturers that provide them. To get a cash rebate, you complete a form and submit it with proof of purchase to the manufacturer by postal mail, email or on a website. Although different types of sales promotions work best for different organizations, rebates are very profitable for companies because many consumers forget or wait too long to send them in. Rebates are a great way to create a way for consumers to perceive a lower price and for them to achieve it, if they remember to return the form.
In business-to-business marketing, sales promotions are called trade promotions because they are targeted at channel members who conduct business or “trade” with consumers. Trade promotions include trade shows, conventions, event marketing, trade allowances, training, and special incentives given to retailers to market particular products and services, such as extra money, in-store displays, and prizes.
When the manufacturers provide coupons directly to consumers that is called a consumer sales promotion, A shelf talker is provided to the retail and is an example of a trade promotion. Shelf talkers are tags or digital displays that present special prices or coupon deals (Figure 10.9).
Trade shows are one of the most common types of sales promotions in B2B markets. A trade show is an event in which companies in a particular industry display and demonstrate their offerings to other organizations they hope will buy them. There are typically many different trade shows in which a company can participate. Using displays, brochures, and other materials, representatives at trade shows can identify potential customers (prospects), inform customers about new and existing products, and show them products and materials. Representatives can also get feedback from prospects about their company’s products and materials and perhaps about competitors.
Companies also gather competitive information at trade shows because they can see the products other firms are exhibiting and how they are selling them. While approximately 75% of company representatives attending trade shows actually buy the products they see, 93% of attendees are influenced by what they see at tradeshows. Trade shows can be very successful, although the companies that participate in them need to follow-up on the leads generated at the shows. One study found that only 20% of companies follow up on leads obtained at trade shows and 17% of buyers are contacted after they express interest (Tanner & Pitta, 2009). Conventions, or meetings, with groups of professionals also provide a way for sellers to show potential customers different products. For example, a medical convention might be a good opportunity to display a new type of medical device. With changing technology, webinars and online trade trades are being used to reach businesses that may not be able to attend in-person.
Sales contests offered by manufacturers to retail store salespeople provide incentives to increase their sales. The sales representative with the most sales of a specific product or brand may win a prize such as a free vacation, company recognition, or cash.
Trade allowances give channel partners, for example, a manufacturer’s wholesalers, distributors, retailers, and so forth, different incentives to push a product. One type of trade allowance is an advertising allowance (money) to advertise a seller’s products in local printed or digital flyers. An advertising allowance benefits both the manufacturer and the retailer. Typically, the retailer can get a lower rate than manufacturers on advertising in local outlets, saving the manufacturer money. The retailer benefits by getting an allowance from the manufacturer.
Another sales promotion that manufacturers, such as those in the tool or high-tech industries, offer businesses is training to help their salespeople understand how the manufacturers’ products work and how consumers can be enticed to buy them. Many manufacturers also provide in-store product demonstrations to show a channel partner’s customers how products work and answer any questions they might have.