Page 644 - Encyclopedia of Business and Finance

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Promotion

providing a list of free products a person can make new contacts, renew existing business rela-
order based on the number dollars charged in a tionships, maintain or build a reputation, and
specified time period. distribute promotional materials.
Point-of-purchase displays. Point-of-purchase promo-
tions can include displays and demonstrations PROMOTIONAL OBJECTIVES
that take place at the point of purchase. The There are a number of promotional objectives, some of
cardboard cutouts of popular movie stars that are the most common being information dissemination,
put next to merchandise are excellent examples of product demand, product differentiation, product high-
this method. One drawback to point-of-purchase lights, and sales stabilization. Regardless of the promo-
displays is that stores do not have time to set up tional objective selected, the company’s goal is to inform
all the ones that are offered, so only a handful of and convince consumers to buy the product.
them are used. Companies frequently offer assis-
tance in assembling and removing promotional Information Dissemination. One of the most basic
displays to encourages storeowners to use their desires of a company is to provide information about a
point-of-purchase displays. product to potential consumers. Tools available to an
Premiums. A premium is a good offered free or at a organization for informing potential consumers about a
low cost to encourage consumers to buy a partic- product include billboards, flyers, Internet Web sites,
ular product. Companies can also offer premiums magazines, newspapers, radio spots, and television com-
in the form of reusable containers bearing names mercials. Normally a variety of these promotional tools
and logos in order to help promote other prod- are used to communicate a single, coordinated message to
ucts. In addition, a company may also decide to potential consumers. These different promotional tools
use a self-liquidating premium. The costs associ- can provide potential consumers with an array of informa-
ated with self-liquidating premiums are passed tion about a product, such as features, quality, and/or
along to consumers through the cost of product. price. The informational focus depends on the makeup of
the target audience that the company is trying to reach
Price packs/cents-off deals. Price packs provide con-
with its message.
sumers with a reduced price that is marked
directly on the package by the manufacture.
Product Demand. Another organizational goal of promo-
Companies can offer price packs in the format of
tional activities is to create product demand. A company
two for the price of one or offer products such as
a tube of toothpaste and a toothbrush in one has several promotional options for fostering product
package for a lower price than that of the two demand. For example, a company may focus on using a
primary demand strategy that concentrates on trying to
items purchased separately. Consumers generally
react favorably to price packs because they are increase demand for a general product or service line.
perceived as a real bargain. Large companies or cooperatives that have well-known
and large product lines normally use the primary demand
Samples. Some companies offer free samples of their strategy. Advertisements for these companies carry over to
products. The rationale for offering a free prod- all product categories and, as a result, may improve sales
uct sample is to achieve immediate consumer in several product areas. Companies also use another mar-
introduction to the product. Companies have keting strategy, known as selective demand, which con-
several ways to introduce potential consumers to centrates on promoting a specific brand within a
product samples. Commonly used delivery meth- company’s product line. Selective demand is often used to
ods include mailing the product, passing the help promote a new product so that consumers are aware
product out in stores, or door-to-door delivery of of the new addition to a large company’s product line. A
the product. The largest drawback of free samples company may also utilize a selective demand strategy
is their high cost. However, it is expected that the when it wants to sell a product that has a high profit mar-
associated sales will offset the initial cost of the gin. A good example of this strategy is the active promo-
free samples. tion of sport utility vehicles by major automobile
Trade shows. Most industries hold conventions and companies.
trade shows each year to show off new technol-
ogy, assess consumer trends, and review other Product Differentiation. A common challenge faced by
issues important to the industry. Trade shows companies is increased competition, which often results in
provide firms that sell to a particular industry an the market being flooded with similar products. Con-
excellent opportunity to promote new products, sumers may conclude that no substantial difference exists

ENCYCLOPEDIA OF BUSINESS AND FINANCE, SECOND EDITION 621