This article will help you select the right promotion to achieve specific sales or marketing objectives. Whether your target is salespeople, middlemen, or consumers, you'll find the pros and cons of each option.

CRITICAL ISSUES

What is the right promotion strategy for your objective? That depends on a number of factors, including the nature of your product or service, means of distribution, audience demographics, and budget. A key to selecting the right promotion is to include the people who will carry it out in the planning process. These might be salespeople, dealers, distributors, service employees, or customers.

To determine the correct promotion strategy, you need to know:

• your objectives;
• the opportunity-the sales or performance increase you expect and the value of that in profits;
• cost-what percentage of incremental sales will you have to invest? Remember, no promotion can mask a deficiency in your product, service, pricing, or marketing strategy.

OBJECTIVES

The following guide describes the best promotional options for achieving specific sales and marketing objectives:

Build closer relations with customers. Companies that focus on customer retention track each customer's transactions and work hard at customer communications, including several types of promotion.

Continuity programs, usually a retail tactic, allow consumers to get such things as towels and dinnerware at discounts based on how much they buy.

Customer councils can tie customers closer to your company, if you provide opportunities for meaningful education and networking at meetings.

Frequency marketing programs provide ever-increasing levels of awards or discounts to regular customers. The popularity of airline miles suggests that these programs can have a major impact on customer loyalty, especially when there's little difference among competitors. The databases needed to track these programs can yield valuable customer information for target marketing or market research. The down side is the administrative burden of keeping track of so many accounts and mailing statements each month.

Incentive programs can help build the loyalty of middlemen, such as dealers, distributors, small retailers, and agents. Exciting merchandise awards or unforgettable trips differentiate you from other suppliers.

Self-liquidators enable consumers to buy merchandise through the mail at a price below retail. Items sometimes bear the name of the sponsoring company. These programs, by definition, should pay for themselves, but they entail some administration. They are a means of obtaining the names of your most loyal customers.

Tie-ins can do the job if they offer customers long-term value, such as occurs in the travel industry.

Build a database. To target their marketing more effectively, many companies build databases of likely prospects.

Contests/sweepstakes help get people to reply to advertising and direct mail but they're also useful as database builders if targeted at people most likely to fit your customer profile. They are relatively inexpensive.

Rebates enable you to track purchasers, because they must provide their name and address in order to receive their check. This is a costly but effective way to get the names of customers.

Frequency marketing enables you to track the names of purchasers over time and even track the quantity and nature of their purchases.

Incentives, usually low-priced merchandise, can get direct-mail recipients to respond to questionnaires. To wind up with the people most likely to buy, select your mailing list carefully.

Get retail displays. In theory, retailers will put up displays when the effort will help boost sales or profit margins. But there's a significant difference between the strategies you use with major chains and those you use with small dealers and distributors (see Article 7030, Distributor Management).

Contests/sweepstakes might get the attention of retailers, even big ones, if the idea is big, backed by sufficient marketing, and exclusive to that retailer in its region.

Dealer incentives, such as merchandise and travel, work best with smaller retailers and dealers, who view these awards as perks for them or their employees. Large chains often won't let managers accept them.

Display contests reward retailers or dealers for putting up inventive or high-profile displays on behalf of a supplier. They work best with smaller retailers, because most big chains won't participate.

Event marketing can help induce a retailer to support a product with displays, if it seems likely to increase traffic and the store is guaranteed exclusivity.

Motivate salespeople.

Building sales momentum requires long-term commitment to recruitment, compensation, training, and team-building, but certain types of promotion help, too.

Incentives introduce an element of fun and can focus employees on activities necessary to succeed. Tangible rewards, such as merchandise and travel, can be distinguished from traditional compensation. Group travel awards have the added benefit of building camaraderie among winners.

Contests/sweepstakes are great attention-getters and generate plenty of fun, but don't depend too heavily on them as an incentive, since winners generally are chosen at random rather than on the basis of performance.

Get a sales appointment.

In sales, getting that face-to-face meeting is half the battle. The most compelling recipe is having a useful product, targeting the right companies and individuals, developing a communications plan that ensures each prospect will see the product and its key benefits, and having the communications effort followed up by several phone calls by knowledgeable salespeople.

Incentives are often the best way to open doors if properly targeted. By offering a purchaser added value as a reward for making a purchase, you are most likely to attract people who are interested in your product or service. Just make sure the incentives are appropriate to your product and the audience.

Motivate dealers.

Getting the commitment of dealers, retailers, and distributors is a complex process that involves building a close relationship with middlemen and partnering with them in a way that helps improve their business (see Article 7030, Managing Middlemen). Warning: Under the Robinson-Patman Act, any promotion offered to large retailers must be offered to smaller stores on a "proportionately equal" basis.

Incentives work best with smaller companies whose principals enjoy getting special perks based on the quantity of purchases or their willingness to participate in a co-op marketing plan. Large companies, especially mass marketers, often will not participate. However, some dealers and distributors that would not ordinarily participate in incentive programs will do so if the programs are structured so that their company benefits from improved employee performance.

Contests/sweepstakes offered to dealers and distributors for putting up displays or otherwise participating in a promotion can also have an impact on smaller companies. It's best to link these efforts with a consumer promotion designed to promote sell-through.

Training, while not a promotion tool, is so important when working with dealers and distributors that it can't be overlooked. If the people who sell your products or services don't understand them, you can't expect to get maximum sales productivity. Keep in mind that many middlemen are leery of manufacturer training programs, unless they see a direct benefit for their company.

Event marketing is a proven way to work with dealers, distributors, or retailers that are looking for a way to increase store attendance or draw attention to their marketing efforts.

Introduce new products.

Product introductions involve communicating to almost all of your organization's stakeholders: salespeople, middlemen, consumers, service employees, and even production employees. The challenge is to promote trial by consumers, get the trade to stock or sell the product, and fire up the sales force and virtually everyone else in the company.

Sampling is probably the most dramatic, and costly, way to get your product into the hands of new prospects. Target your giveaway effort to people most likely to buy, or many of your costly samples will end up in the trash.

Sweepstakes/Contests can help attract attention, especially if they relate thematically to the product.

Incentives spur product trial, but tread cautiously if you are considering a rebate, coupon, or cash discount. Besides the fact that coupon redemption continues to fall and generates less and less enthusiasm from retailers, launching a new product with discounts can tar it with a low-price image that will undermine your long-term positioning. An added-value offer, such as gift-with-purchase, can spur trial without that risk but can be costly.

Promotional products can be a highly targeted, cost-effective way to build brand identify if you select products appropriate to your audience and get them into the right hands.

Displays at retail are critical to new product introductions, but chances are your dealers or retailers will want special pricing, co-op allowances, or even slotting fees for putting them in the store. Some retailers will give special space to new products, but they'll expect your product to reach a specific threshold of sales within a specific time, or out you go.

Event marketing often plays a major role in new-product launches, especially at malls or public events that attract the desired audience.

Inspire "pantry loading."

When you hear that you're about the get a new competitor, you might want to get your dealers, distributors, and consumers to stock up on your product so that they have no room in their "pantries" for the competitive product.

Incentives, whether cash, merchandise, or travel, are one of the most common pantry-loading devices, especially if tied to large, multiple purchases. However, make sure you don't clog your distribution channel with too much product, or it will eventually get dumped by disgruntled distributors or retailers, perhaps to be replaced by your new competitor's products.

Coupons are another means of spurring bulk purchases, as long as you have retailers that will redeem them.

Rebates provide an alternative approach that doesn't involve the retailer in administration.

Continuity plans can help you fend off a competitor, but only if you have a lot of advance notice, since these programs, by definition, take time to launch and implement.

Build brand loyalty.

Contrary to the advice of some advertising and promotion agencies, it takes more than advertising and promotion to build loyalty. Consistent value, customer service, and innovation are the keystones, so design your promotions to draw attention to these factors.

Everyday low pricing continues to inch forward in the automotive and retail arena and may emerge as a primary strategy once people begin to do a significant amount of their shopping via the Internet.

Frequency marketing programs, such as frequent-buyer programs and continuity plans, work best when competitors' value, service, and innovation are near parity or when you want to lock in consumers over time. Warning: well-designed frequency programs become addictive.

Self-liquidators get consumers involved with your product or service by getting them to buy something linked to what you sell. While this marketing tactic does not have a direct impact on loyalty, it is often part of a long-term process of getting closer to the core customer.

Promotional products don't have a direct impact on loyalty either, but they contribute by reminding the recipient of the sponsor's company.

Increase trial.

Whether or not your product or service is new, there are times when you want to promote trial among a new target audience.

Incentives, such as gifts-with-purchase, are a proven, though costly, way of promoting first-time usage.

Sampling is the most expensive way to promote trial and obviously isn't feasible for higher-priced products.

Contests/Sweepstakes can be an inexpensive way to promote trial by getting consumers to enter a contest asking questions related to your product. Remember, however, that you cannot require contestants to purchase a product in order to participate in the contest or sweepstakes.

Encourage referrals.

One of the most overlooked sales opportunities is customer referrals. Businesspeople say they get most of their business by word-of-mouth, yet they do little to promote it.

Incentives and gifts often are used to induce people to recommend a product or service to a friend. You can easily measure the number of referrals by the quantity of redemptions you get.

Contests/Sweepstakes can be used, but they probably won't generate as many referrals as a direct incentive, because some people will assume they can't win.

Promote sell-through.

Once you've successfully sold your products into the appropriate distribution channels, you want to make sure they sell through to the consumer or end user.

Coupons have declined in favor due to low redemption rates and administrative hassles but remain a viable option in packaged goods.

Rebates provide the same sort of savings to shoppers as coupons without involving the retailer. You can put the offer right on the package and let consumers redeem the rebate at your fulfillment house.

Incentives. Premiums, whether on-pack, delivered by the salesperson, or sent through the mail, can promote sell-through. Just make sure the offer appeals to your audience.

Attract people to your trade show booth.

Promotions can help, but only if you've done a good pre-show mailing to prospective attendees and provided other essentials: something new or unusual to exhibit, an inviting display, and outgoing people at the booth. In planning your promotion, consider mailing your pre-show promotion piece only to people you really want. Otherwise, you might have lots of booth traffic but little time to talk with serious customers.

Contests/Sweepstakes draw crowds but not necessarily qualified buyers. Be scrupulous in your list selection. Most shows sell lists of pre-registered buyers, broken out by category.

Event marketing, such as guest celebrity appearances at your booth or performances by actors, magicians, or musicians, can attract a crowd, if that's your objective. If your true goal is to attract qualified attendees, consider limiting a portion of your event to a pre-invited list.

Incentives, usually consisting of creative, low-cost merchandise, will bring people to your booth if marketed in advance to selected attendees. One approach is to send prospects half of the gift they will receive if they show up.

Tie-ins enable you to put on a bigger attendance-building event by sharing the effort with other exhibitors. But make sure it's clear who's responsible for what, or nothing will happen.

Improve attendance at events.

The best way to attract people, of course, is to offer the right product to the right audience at the right price and make sure everybody who should know about it does. Sometimes, it's not so simple, and sponsors need a boost.

Incentives, such as gifts at the gate, can have a dramatic impact on attendance if you choose an appropriate item-and can afford the cost. Look what happens at the ball park on Bat Day.

Contests/sweepstakes can lure those who are wavering, but you have to offer something big. And, remember, it's illegal to require people to make a purchase in order to enter a contest or sweepstakes.

Increase response to direct mailings.

You can try all the gimmicks you want, but nothing works better than the right list, the right offer, and the right timing. Properly executed, though, the right promotion will pay its way.

Contest/Sweepstakes can induce people to open their mail and respond, but they do not guarantee you'll attract actual prospects. Select your list well, or you'll get lots of entries but few serious prospects.

Promotional products included in direct mail packages increase the cost but also improve the chances that they'll get opened. Again, target your mailing carefully.

Gift-with-purchase offers are more targeted, because they appeal only to those most likely to buy.

Increase visibility of advertising.

Advertising clutter and the growing ability of consumers to avoid ads has led advertisers to seek ingenious ways to attract attention.

Contests/sweepstakes are a relatively inexpensive way to amplify your advertising. You can package an extraordinary sweepstakes or contest prize for less than the cost of the average ad, and a good offer is bound to attract attention. But make sure the offer doesn't dwarf your advertising message. Ideally, it should enhance the ad theme.

Incentives, such as special discounts, rebates, or gift-with-purchase offers, are a more costly way to improve advertising visibility, since they go to all respondents, rather than to just the lucky winner of a contest or sweepstakes.

Promotional products are powerful advertising reinforcers, especially when they appeal to the target audiences and get into the hands of the right people.

Self-liquidators can draw consumer attention to an ad by offering an especially low price on a desirable product, and they carry few costs since their cost is paid for by the consumer. Keep the offer compelling and easy to communicate.

SUPPLIERS

Lillian Vernon. Corporate Sales Division offers a variety of services for all your business needs ranging from personalized corporate gifts to premiums, incentives, promotions, awards, and gift certificates. Custom programs can be developed. Contact Regina Smith, business coordinator, at 914-925-1593.

To find a supplier, go to #9520, Supplier Finder.

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