Question

Identify two sales promotion activities of a company in an international market:

1. Describe what the company aims to promote

2. What are the benefits and drawbacks of each?

3. Which do you think is more effective? Why? (considering the characteristics of the product/target market)

Answer 1

Sales promotion are marketing activities that stimulate consumer purchases. They are short term efforts directed to the consumer or retailer to achieve specific objectives as consumer product trial or immediate purchase, consumer introduction to the store, gaining retail point of purchase displays encouraging stores to stock the product and supporting and augmenting advertising and personal sales efforts.

Product sampling

An effective promotional tool when the product concept is new or has a very small market share is product sampling. For example, Nestle baby foods faced such a problem in France in its attempt to gain share from Gerber, the leader. The company combined sampling with a novel sales promotion program to gain brand recognition and to build goodwill. Since most French peopleptake off for a long vacation in the summertime,piling the whole family into the car and staying at well maintained campgrounds, Nestle provided rest stop structures along the highway where parents could feed and change their babies. Rest stops are located along main travel routes and sixty four hostesses welcome 120000 baby visits and dispense 600000 samples of baby food each year. There are free disposable diapers, a changing table and high chairs for the babies to sit in while dining.

The biggest drawback is the cost. Company have to pay to produce those products which they are not getting paid for.

Coupons

Coupons is a form of sales promotion which offers purchasers price savings or other incentives when the coupon is redeemed at the time of purchase. For example, in parts of Latin America, a portion of the advertising sales budget for both pepsi-cola and Coco-cola is spent on carnival trucks, which make frequent trips to outlying villages to promise their products. When a carnival truck makes a stop in a village, it may show a movie or provide some other kind of entertainment; the price of admission is an unopened bottle of the product purchased from the local retailer. The unopened bottle is to be exchanged with a cold bottle plus a coupon for another bottle. This promotional effort tends to stimulate sales and encourages local retailers who are given prior notice of the carnival truck's arrival, to stock the product. Nearly 100 percent coverage of retailers in the villages is achieved with this type of promotion.

Benefits of coupons include cleaning out inventory, attracting new customers, introducing new brands, quick infusion of cash,selling non discounted products etc.

Drawbacks include increase of cost, alienation of regular customers by providing coupons only to new customers,lacks sustainability which means group of customers will buy only when there is a coupon.