In the world of marketing communications, advertising is known as “above-the-line” marketing, while all the other forms of marketing are known as “below-the-line” marketing, and include all activities that encourage consumer purchases and improve retailer or intermediary effectiveness and co-operation. This includes sales promotion. Sales promotion covers activities such as in-store demonstrations, exhibitions, trade fairs, samples, coupons, sponsorship of special events such as sports activities, concerts, films, catalogues, discount offers, and so on. Sales promotion specifically excludes advertising, personal selling and public relations.
Sales promotion can be fraught with difficulty in foreign markets
As with advertising, international sales promotion is beset with legal pitfalls. For example, in Germany, discounts are forbidden if they constitute a real financial incentive to buy. Samples may not be larger than is absolutely necessary to provide an adequate trial for the product, and a promotion may not normally require that the purchaser to send in labels or packet tops. It is essential therefore that you always check each planned promotion against local regulations.
In addition, promotions that require the support of the retailer to process coupons, set up display material, etc., will always be more difficult to secure in foreign markets, often because of the lack of space and handling facilities.
Sales promotion may be a good alternative to advertising
In markets where media limitations make it difficult to reach the consumer, as is the case in many developing countries, or where advertising is very expensive, as in many developed countries, the percentage of your promotional budget allocated to sales promotions may have to be increased. In certain parts of Latin America, for example, a portion of the advertising sales budget for the Coca Cola company is spent on carnival trucks which travel to outlying villages to promote the product. When the truck stops in a village, it may show a film or provide some other form of entertainment for which the admission requirement is an unopened bottle of Coke purchased from the local retailer. On presentation, the unopened bottle is exchanged for a cold bottle plus a coupon for another bottle. This promotion stimulates sales and encourages local retailers to stock the product with the result that nearly 100 per cent coverage of the product by retailers in the village is achieved. In other cases, village stores may be given free samples or have the exterior of their stores.
Sales promotion alternatives
There are many ways to promote sales and we briefly discuss these below (they have beed divided into business-orientated and consumer-orientated promotions):
- Business-orientated promotions
- Promotional allowances – With space on retailers’ shelves at a premium, a promotional allowance is often paid by a manufacturer or exporter to a retailer to acquire shelf or display space where you can display your products.
- Contests – Encourage sales by initiating a competition that allows the top salesperons(s) in a country or region to win an attractive prize, such as a luxury holiday for example, for generating the most sales in a particular period. Be sure to obtain the permission of their management before intorducing such a contest.
- Cooperative advertising – This occurs when you, as the manufacturer, are prepared to share the cost of any advertising with your foreign buyer. You may agree to pay an advertising allowance that is based on a percentage of the retailer’s order. Although this allowance is to be used for advertising by your intermediary, it remains a sales promotion tool, as you are essentially striving to promote sales through this means.
- Sales training – Be prepared to spend money to train the sales staff of your foreign representatives. Not only will this generate increased sales, but it strengthens the relationship between your two organisations.
- Sales aids and brochures – This is another area you should not fall short in. Make sure that you provide your foreign representatives with all the sales aids (such as CD/DVDs, Powerpoint presentations, posters, etc.) and product brochures. This will help them sell your products and should encourage buy-in from the foreign sales staff. If you give them nothing, be prepared for poor sales.
- Demonstration models – With some industrial goods, it is imperative that you provide the foreign sales staff with demonstration models. If it is a very expensive item, provide at least one model that they can keep at their head office and take prospective clients to show. If you can afford more, supply more. Demonstration models are a good way to encourage sales.
- Slotting fees – A slotting fee may need to be paid to get your product into the sales catalogues of wholesalers or large retail chains. By ensuring that your product is in the catalogue, you stand a good chance that down-the-line retailers or branches will buy your products.
- Discounts and rebates – Discounts and rebates offered to your representatives and their customers to stock your product(s), is another means of promoting sales.
- Incentive programmes – These are also often used to incentivise sales staff. You pay them an ‘additional’ commission for sales achieved. Bear in mind that you will need to obtain the permission of the management of your foreign representative; you cannot just introduce such incentives without their permission. Targets should be achievable, or the sales staff will loose interest and you may even loose sales this way.
- Consumer-orientated promotions
- Competitions and sweepstakes – You may want to run a competition or sweepstake or contest to encourage consumers to buy your products. Make sure of the legality of such activities, as they make be considered to be a form of gambling. These types of promotions, if well organised, are very popular and effective in growing sales.
- Sampling – Giving away small samples (also called ‘give-aways’) to encourage consumers to try your product and hopeful buy more of it, is a good sales promotion technique, if a little expensive. Not all products are suitable for sampling.
- Loyalty programmes – Loyalty programmes involve incentives that reward repeat purchases. For example, if you buy ten meals, the 11th meal is free.
- Tie-in promotions – These involve the selling of two different brands (either from the same company or from different companies) as a single item. For example, if you buy Colgate toothpaste at its normal (or slightly higher) price, you will receive an OralB toothbrush with the toohtpaste. Usually, the toothbrush and toothpaste are packaged together as a single item.
- Price incentives – A price incentive is a short-term price reduction (such as a sale, introductory offer or special) to encourage customers to buy the product. This form of sales promotion is often used where brand loyalty is low and where price incentives are necessary to encourage repeat purchases.
- Coupons – These are a form of price incentive and are small cut-outs or tear-outs or inserts that are made available to customers in magazines, in stores and through other channels. The customer takes (tears out) the coupon and visits any retailer that stocks the product and can then redeem the coupon for the product usually at a discount (e.g. 10 cents off). Coupons are popular in certain parts of the world.
- Premiums – Another form of price incentive, premiums are a like a small gift you can get if you sign up for a subscription or buy a product. The premium ‘item’ may be bundled with the main item of purchase.
- Bonus pack – An example of this type of sales promotion method is is where you receive a 400ml can when you buy a standard 330ml can. The can usually is slightly bigger highlighting the fact that you are getting a free ‘bonus’ when you buy this product.
In terms of international marketing, an in-store promotion (which is different from in-store advertising that we discussed under ‘advertising’) is an elaborate promotion of consumer goods normally organised in a specific country or group of countries. The aim of a company choosing to participate in such a promotion would usually be continuity of supply of the product over a period of time, and achievement of this goal would need to be evaluated at regular intervals. In-store promotions are most successful when the products involved are already being purchased and sold by the store and are not simply purchased specifically for the event.
International trade fairs
International trade fairs and exhibitions are an excellent and highly recommend means of promoting your products in the new foreign marketplace. They should form an integral part of any company’s overall export marketing plan. Indeed, they are so important, that we will deal with international trade fairs under a separate heading. Click here to learn more about trade fairs and exhibitions.