Chapter 16: Marketing

Sales Promotion

Marketing activities that provide extra value or incentives to the sales force, distributors, or the ultimate consumer and can stimulate immediate sales.

Consumer-Oriented Sales Promotion

Sales promotion techniques that are targeted to the ultimate consumer such as coupons, samples, contests, rebates, sweepstakes, and premium offers.

Trade-Oriented Sales Promotion

A sales promotion designed to motivate distributors and retailers to carry a product and make an extra effort to promote or “push” it to their customers.

Account-Specific Marketing

Development of customized promotional programs for individual retail accounts by marketers.

Consumer-Franchise Building (CFB) Promotions

Sales promotion activities that communicate distinctive brand attributes and contribute to the development and reinforcement of brand identity.

Nonfranchise-Building (Non-FB) Promotions

Sales promotion activities that are designed to accelerate the purchase decision process and generate an immediate increase in sales but do little or nothing to communicate information about a brand and contribute to its identity and image.

Sampling

A variety of procedures whereby consumers are given some quantity of a product for no charge to induce trial.

Freestanding Insert (FSI)

A four-color multipage printed advertising booklet that contains consumer packaged-goods coupon offers delivered with newspapers (usually in Sunday editions). FSIs can also be delivered in direct-mail packages along with local retailer ads or can be cooperative booklets such as RedPlum or SmartSource as well as solo books done by companies.

Premium

An offer of an item of merchandise or service either free or at a low price that is used as an extra incentive for purchasers.

Self-Liquidating Premium

Premium that requires the consumer to pay some or all of the cost of the premium plus handling and mailing costs.

Contest

A promotion whereby consumers compete for prizes or money on the basis of skills or ability, and winners are determined by judging the entries or ascertaining which entry comes closest to some predetermined criteria.

Sweepstakes

A promotion whereby consumers submit their names for consideration in the drawing or selection of prizes and winners are determined purely by chance. Sweepstakes cannot require a proof of purchase as a condition for entry.

Game

A promotion that is a form of sweepstakes because it has a chance element or odds of winning associated with it. Games usually involve game card devices that can be rubbed or opened to unveil a winning number or prize description.

Refund

An offer by a manufacturer to return a portion of a product’s purchase price, usually after the consumer supplies a proof of purchase.

Bonus Pack

Special packaging that provides consumers with extra quantity of merchandise at no extra charge over the regular price.

Price-Off Deal

A promotional strategy in which the consumer receives a reduction in the regular price of the brand.

Loyalty Program

Program designed to encourage repeat purchase or patronage of a specific brand of a product or service.

Event Marketing

A type of promotion where a company or brand is linked to an event, or where a themed activity is developed for the purpose of creating experiences for consumers and promoting a product or service.

Event Sponsorship

A type of promotion whereby a company develops sponsorship relations with a particular event such as a concert, sporting event, or other activity.

Experiential Marketing

Involves a live event or experience that provides consumers with the opportunity to see the product or service and experience it for themselves.

Push Money (PM)

Cash payments made directly to the retailers’ or wholesalers’ sales force to encourage them to promote and sell a manufacturer’s product.

Trade Allowance

A discount or deal offered to retailers or wholesalers to encourage them to stock, promote, or display a manufacturer’s product.

Off-Invoice Allowance

A promotional discount offered to retailers or wholesalers whereby a certain per-case amount or percentage is deducted from the invoice.

Slotting Allowance

Fees that must be paid to retailers to provide a “slot” or position to accommodate a new product on the store shelves.

Failure Fee

A trade promotion arrangement whereby a marketer agrees to pay a penalty fee if a product stocked by a retailer does not meet agreed-upon sales levels.

Planogram

A planning configuration of products that occupy a shelf section in a store that is used to provide more efficient shelf space utilization.

Trade Show

A type of exhibition or forum where manufacturers can display their products to current as well as prospective buyers.

Cooperative Advertising

Advertising program in which a manufacturer pays a certain percentage of the expenses a retailer or distributor incurs for advertising the manufacturer’s product in a local market area.

Horizontal Cooperative Advertising

A cooperative advertising arrangement where advertising is sponsored in common by a group of retailers or other organizations providing products or services to a market.

Ingredient-Sponsored Cooperative Advertising

Advertising supported by raw material manufacturers with the objective being to help establish end products that include materials and/or ingredients supplied by the company.

Vertical Cooperative Advertising

A cooperative arrangement under which a manufacturer pays for a portion of the advertising a retailer runs to promote the manufacturer’s product and its availability in the retailer’s place of business.

Sales Promotion Trap

A spiral that results when a number of competitors extensively use promotions. One firm uses sales promotions to differentiate its product or service and other competitors copy the strategy, resulting in no differential advantage and a loss of profit margins to all.