Exercise 22. Working in pairs do the following tasks.

1. Promoters spend more money on sales promotion than advertising. Study the list of sales promotional techniques. Comment on if you are familiar with the activities involved in sales promotion at least as consumers: displays (store displays); rebates (refunds from producers); contests ("You may have won $1 million"); lotteries; audiovisual aids; samples (toothpaste, soap); catalogs; coupons (10 c off); demonstrations; premiums (free glass when you buy a meal); special events; exhibits; shows (fashion shows); portfolios for salespersons; deals (price reductions); trading stamps; trade shows; conventions; bonuses (buy one, get one free); sweepstakes; incentives (the gift in a Cracker Jack box).

2. An article in "Marketing News" reported that spending on sales promotion is over $100 billion a year. In the USA spending on sales promotion activities in recent years has been about $40 billion more than advertising. Read about the results of the survey on where sales promotion dollars were spent and discuss the questions below: meetings and conventions (dollars spent – 31%), direct mail (16%), premiums and incentives (e.g., rebates) (14%), point-of-purchase displays (12%), audiovisuals and miscellaneous (8%), promotional ad space (8%), exhibits and trade shows (6%), couponing (4%). Coupons were highly accepted. When asked about their reactions to sales promotion efforts, 8 % of 7,554 households polled felt coupons increased the value of shopping dollars. Some 50 % of respondents felt rebates gave the best value. Many felt that sweepstakes, contests, and mail-in efforts were not worth the trouble. About 40 % found sweepstakes and contests "too much to deal with".

Much time, effort, and expense is spent evaluating advertising effectiveness. Not nearly as much effort is placed on evaluating sales promotion efforts, even though more money is spent on these promotions than advertising.

3. Answer the questions.

A. Meetings, conventions, exhibits, and trade shows take up some 37% of sales promotion dollars. What do you think of the effectiveness of such activities? Do you see any signs of wasteful spending at such events?

B. Point-of-purchase displays are an important sales promotion tool. Think about the displays you have seen. Which are most effective and why?

C. What is your reaction to coupons, rebates, sweepstakes and contests? Are your reactions similar to those in the survey? What would you recommend to producers given those reactions?

4. Comment on the following statement by Theodore Levitt: "The marketing view demands the active recognition of a new kind of competition. This is not competition between what companies produce in their factories, but between what they add to their factory output in the form of packaging, services, advertising, customer advice, financing, delivery arrangements, warehousing, and other things people value".

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