Sales promotion has been in constantly growth since the 1960s and have today become one of the

key
factors in the promotional mix. The methods used have become more sophisticated and an increasing
number of companies are realizing the importance of a well structured promotion strategy.
The purpose of this thesis is to provide a better understanding on how sales promotion is used in B2B
setting. In order to reach this purpose, research questions focusing on the objectives of sales promotion,
as well as which sales promotion tools that were used were stated. Based on theses research questions,
a review of the relevant literature was conducted, resulting in a conceptual framework, which was used
to guide this study data collection.
A qualitative, case study approach was used, using interviewing at an industrial company in
Tagum(NCCC) as the primary data collection tool. The finding indicates that, although the individual
objectives of the tools can be different they can still be used overall to lead to the same overall goal. It
was also found that the focus in not always on using sales promotion tools to generate sales, but to
improve relationships. As for the tools used, it was found that there are commonly used sales promotion
tools in B2B setting. More specifically, gift giving can be deemed inappropriate in certain context and
should be used carefully.
Promotion is one of the key factors in the marketing mix and has a key role in market success.
Promotion is used to ensure that customers are aware of the products that the organization is offering.
The promotional mix is the combination of the different channels that can be used to communicate the
promotional message to the customers. The channels to be used are; advertising, direct marketing,
public relations and publicity, personal selling, sponsorship and sales promotion.(Rowley, 1998).
The importance of sales promotion has increased since the 1960s and also the sophistication of
methods used. Sales promotion sometimes considered as an activity of less importance but companies
increasingly realize the importance of having a well planned and structured program for sales
promotion. All businesses need to communicate to the customer what they have to offer. (Jobber &
Lancaster, 2006)
Dwyer and Tanner(2006) states that Business customers are larger than individual customers; meaning
that each business customers is more important to the economic situation of the business marketers
company. There are also fewer business customers, so each business customer is also more important
to the economical situation of the company; unhappy customers can affect the business marketers
business in a noteworthy way. (Ibid) According to Fill and Fill (2005) the B2B market for goods and
services bought and sold is far larger than the customer market. The business market includes many
different types and sizes of organization that cooperate and create relationships of different importance
and duration.(Ibid)
Sales promotion are marketing and communication activities that change the price/value of a product
or service perceived by the target, thereby (1) generating immediate sales and (2)altering long-term
brand value. (Shultz, Robinson, & Petrison, 1998)

According to Kwok (2005) there are two types of sales promotion; monetary and non-monetary. These
two types of sales promotion are separated and categorized by their significant differences: Monetary
sales promotion are transactional and recognized for providing immediate rewards to the customer, e.g.
discounts, coupons, rebates and price packs; non monetary sales promotion are recognized for
providing delayed rewards and being relationship-based, e.g. sweepstakes, free gifts and loyalty
programs. (Ibid)
Shultz, et al. (1998) says that sales promotion generally works on a direct behavioral basis rather than
effecting awareness or attitude. It is continuously said that most types of sales promotions affect the
decision-making and purchasing stages of the buying-process directly. Compared with other tactics sales
promotion generally has less long-term effectiveness, this means that that sales promotion generally has
less long-term effects and creates more immediate results. (Ibid)
The extensive use of sales promotion has led to considerable debates concerning whether or not it is
effective. Critics mean that sales promotion are ineffective in the long run and lead to loss in market
share since it makes the consumers promotion prone. Other researchers have shown the opposite; that
sales promotion is effective in the long-run since it leads to increased sales and profit. (Kwok & Uncles,
2005)
The sales promotional tools companies are using are divided in value increasing and value adding tools.
Value increasing tools are such as price deals, coupons and refund offers while value adding promotions
are leaving the price and quantity of the core product untouched. Instead value are added to the
product, for instance a free gift could be added. (Peattie & Peattie, 1995)
The advantage of value adding is that they do not risk being involved or starting any price wars. Trying
to put effort on value adding and value increasing promotions often lead to success but there is no
guarantee. The main difficulty for companies trying to be competitive through the use of sales
promotions is to choose the tool most appropriate to the companys brand and to the market where the
companys products exist. (ibid)
Alvarez & Casielles (2005) say that sales promotion is a stimulus that is offered from time to time, and
encourage publicity that will lead to action for purchase of a certain product. Sales promotion
techniques are techniques that immediately try to affect customers buying behavior. Research is telling
that sales promotion activities should be done infrequently, when the customers do not expect it. If the
customers are aware when the sales promotion activity will be headed, then the results will not be as
successful.
Alvarez & Casielles (2005) continues by saying that because the sales promotion is conducted from time
to time, this is not something done on impulse, sales promotion activates have to be well prepared,
organized and integrated in the companys marketing plan. It is also crucial for the companies to decide
what the objectives for the sales promotion are. When the objectives are decided, the choice of
promotion technique can be decided. The sales promotion activities chosen will depend on the
objectives.

However no matter what sales promotional tool one company will choose it will increase brand
awareness and it will also encourage customers to try new goods if they are managed in a strategically
and well organized way. (Ndubisi & Moi, 2005)
Any successful B2B strategy has to help the customer to be loyal and supportive to the firm and its
products. The customer do not just get a need, the B2B marketer have to help the customer though
getting him to feel a need and then buy the product and finally become loyal. (Hellman, 2005) When a
B2B marketer wants to develop strategy driven promotions that motivate B2B customers, they have to
find a solution to the problems with purchase barriers. First some key questions have to be answered;
who is the true decision-maker at the targeted company; what excites the decision-maker; what is
holding the buyer back. When these questions have been answered then the type of promotional
strategy can be chosen and the sales promotional technique derived will be depending on the
companys objectives. (Hellman, 2005)
In order to develop a successful sales promotion strategy a clear definition of the targeted market must
be included. It is important to understand why the potential customers are not buying the products and
develop a specific program to overcome these barriers. To understand the customers mental process
the Customer learning curve can be of importance

Literature Review
Sales Promotion
According to Shimp (2003), sales promotion refers to any incentive used by a manufacturer to induce
the trade (wholesalers, retailers, or other channel members) and/or consumers to buy a brand and to
encourage the sales force to aggressively sell it. Totten & Block (1994) stated that the term sales
promotion refers to many kinds of selling incentives and techniques intended to produce immediate or
short-term sales effects. According to Peattie and Peattie, (1994); Lehman and Winer (2002) and Walsh
(2000), sales promotions can be loosely defined as special offers which essentially aim to stimulate
demand during the period in which they are set. Blattberg and Neslin (1990) summarize the various
definitions offered by several authors (Kotler, 1988; Webster, 1981; Davis, 1981), and develop the
following definition of sales promotion: sales promotion is an action-focused marketing event whose
purpose is to have a direct impact on the behaviour of the firms consumers.
Impact of Sales Promotion on Consumer buying behavior
Balaghar , Majidazar, and Niromand (2012) described Sales promotion as most effective tool after
advertising. According to them, sales promotion increases sales volume. Blattberg, Eppen and
Lieberman (1981) described that Sales promotion increases purchase acceleration in terms of quantity
purchased. It also decreases timing between two purchases. Ailawadi and Neslin (1998) argued that
Sales promotion induces purchase of more quantity of product than without sales promotion. Even, it
also increases the quantity consumed by the customers. Sales promotion also leads to brand switching
among consumers. However, some of the authors have reported that sales promotion does not have
significant impact on consumer buying behavior. Manalel, Jose and Zacharias (2007) found that

Consumers do not perceive sales promotion scheme favorably. According to Das and Kumar (2009),
Retail sales promotion plays limited role on consumer buying behavior.

PRICE-OFF
Price off offer: Under this offer, products are sold at a price lower than the original price. This type of
scheme is designed to boost up sales in off-season and sometimes while introducing a new product in
the market. It also helps to reduce inventory. For example, Buy 2 men T-shirts at Rs. 599/- and 1 T-shirt
at Rs. 399/- (MRP: Rs.399/T-shirt).
Price off Offer and consumer behavior
It is a reduction in a brands regular price. According to Blair and London (1981), the major reason for
marketers to use the price-off reductions is that this type of deal usually presents a readily apparent
value to shoppers, especially when they have a reference price point for the brand, therefore they can
recognize the value of the discount. According to Martinez-Ruiz et al (2006), temporary retail price
reductions increase sales of the brand. Percy et al (2001) reported that consumers pay attention to
price-off promotions.

Coupon
Whats the difference between a coupon and sale?
A sale is available to everyone that walks through your door or visits your website. In theory, coupons
are limited to a select group of potential buyers in possession of a physical coupon or promo code.
Because of this difference, coupons can be more attractive, because they can allow you to sell at a
higher price (your normal price) to some customers, while discounting to those that are more price
sensitive.
Why do retail stores, restaurants, and local businesses use coupon advertising?

To acquire more customers I believe this is the number one reason why businesses use coupons in
marketing.
To get existing customers to buy more When used effectively coupons can create new demand from
existing customers. The benefit of targeting existing customers is that they are relatively inexpensive to
reach and may be motivated by a smaller discount than a brand new customer.
To instill loyalty among existing customers Sending a coupon is one way of saying we appreciate your
business. This may be particularly important to avoid alienating existing customers, if you are sending
out discounts to new potential customers.
To get customers to front-load purchases When large companies do this, its derogatively called
channel stuffing. For a small business during a temporary slowdown this might not be such a bad idea,
as the cost of borrowing money for working capital is so high.

Do coupons make economic sense for acquiring customers?

The cost of coupons is often higher than many merchants believe:
There is cost to marketing / advertising their coupons. There are many ways in which you can GET
COUPONS in the hands of local customers. You can put coupons in your local Penny Saver circular, you
can put an ad in a local newspaper, or even mail potential customers coupons. If you want to use online
marketing, there are a range of options from sites that specialize in coupon distribution to daily deal
sites, like Groupon. However, there are expenses associated with all these options.
How much does it cost to advertise a coupon?
Of course, the answer will vary based on how many people are receiving the coupon, how specific an
audience you are trying to reach and the method of distribution.
Sending A POSTCARD Lets say you have pet store and want to send a 5,000 local dog owners a
coupon for DOG FOOD . You will have expense of mailing (33 cents x 5,000 = $1,650), the cost of
renting the list of addresses (for the purpose of estimation lets say $100 per 1,000 names = $500), and
the cost of printing the card and applying postage (for the purpose of estimation lets say its 30 cents x
5,000 = $1,500). Total estimated cost $3,650.
There are less expensive ways to send a coupon in the mail, if youre willing to have your coupon be sent
as part of a package of coupons. For example Valpak, one of the oldest names in co-op advertising will
enable you to send your coupon out to around 10,000 homes in a targeted geographic region for
approximately $400. In this case both dog owner and non-dog owners will get the coupon and your
coupon will not stand out like it would for a postcard, but its 1/10th the cost for twice the number
homes. (Here is a good article on small business advertising with Valpak from Liz Magill.)
In the physical worlds of mailing and newspapers, the costs of advertising an offer are generally fixed
based on the number of people receiving the offer, regardless of the results. However, in the online
world, the cost of advertising may be a percentage of the revenue which the coupon brings in.
For example, this is the business model of the daily deal sites like Groupon. Daily deal sites offer steep
discounts, like 40%, with the catch that buyers must immediately pay for the goods and services prior
to using it. They will do an amazing job of promoting your offer for completely free, but they take 50%
of the revenue that the offer generates.
Regardless of how you promote your offer, online or traditional methods, there is generally going to be
a cost to letting people know about it.

Are coupons generating single sales or new clients?

There is an open question as to what types of client coupons tend to generate. Many of those that
actively seek coupons tend to be extremely price focused and may not return if a discount not longer
exists. This is particularly true for daily deal sites like Groupon. On the other hand, if youre opening a
new restaurant / store or new product line, potential clients may be looking for an excuse to try it or
visit your store. A coupon with an expiration date may encourage them to take the next step.
How to do the math on using coupons for generating new business.
You will have to make a number of assumptions. However, as you run advertising campaigns featuring
coupons, you will able to confirm or disprove these assumptions.
((A) + ( C) + (D) (B)) / E = cost of acquiring a new customer using coupons
(A)$ Cost Of Promotion (not including discount):
(B) $ Sales From New Customers Resulting From Promotion:
(C)Cost of Good and Services Provided To New Customers:
(D)Lost Revenue (discounts) From Existing Customers:
(E) Number Of New Customers That Return After Promotion:
For similar analysis with an example, read Doing The Math On Groupon by Jay Goltz.
Thats our article for today, if you have any questions or comments please leave them in the comments
section below. Also be sure to stay tuned for the next article in our offline marketing series, where we
will discuss billboard advertising.
In marketing, a coupon is a ticket or document
financial discount or rebate when purchasing a product.

that

can

be

exchanged

for

Customarily, coupons are issued by manufacturers of consumer packaged goods or by retailers, to be

used in retail stores as a part of sales promotions. They are often widely distributed through mail,
coupon envelopes, magazines, newspapers, the Internet (social media, email newsletter), directly from
the retailer, and mobile devices such as cell phones. Since only price conscious consumers are likely to
spend the time to claim the savings, coupons function as a form of price discrimination, enabling
retailers to offer a lower price only to those consumers who would otherwise go elsewhere. In addition,
coupons can also be targeted selectively to regional markets in which price competition is great.

Types and uses

There are different types of coupons such as discounts, free shipping, buy-one get-one, first-time
customer coupons, free trial offer, launch offers, festival offers and free giveaways.

Function
Coupons can be used to research the price sensitivity of different groups of buyers (by sending out
coupons with different dollar values to different groups). In addition, it is generally assumed that buyers
who take the effort to collect and use coupons are more price sensitive than those who do not.
Therefore, the posted price paid by price-insensitive buyers can be increased, while using coupon
discounts to maintain the price for price-sensitive buyers (who would not buy at a higher price).When
these coupons are entered at the time of the checkout process, it reduces the order total for the
customer.
Grocery coupons
Grocery coupons come in two major types: store coupons and manufacturer's coupons.
Store coupons are coupon-based discounts offered for a particular item or group of items. The issuing
store will accept its own "store coupons," but some stores will also accept store coupons that are issued
by competitors.
Coupons issued by the manufacturer of a product may be used at any coupon-accepting store that
carries that product.
Manufacturer's coupons have the advantage of being currency at a variety of retailers, not just at one
store.
Grocery coupons are incentives for people who want to save money, but manufacturer coupons are
primarily intended to advertise products and lure new customers with financial incentives. They may
also be used to increase the sales of newspapers or other publications. For example, people may
purchase multiple copies of a newspaper or magazine in order to use the coupons contained within.
Some grocery stores regularly double the value of a grocery coupon as an incentive to bring customers
into their stores. Additionally, stores might hold special events where they will double or triple coupon
values on certain days or weeks. Whether or not a specific grocery chain will double or triple coupons
usually depends on the original coupon value.For eample, many Kroger-owned stores double coupons
with a value of $0.50 or under.
Expiration
Most coupons have an expiration date after which they will not be honored. For example, Christmas
coupons are valid only throughout the Christmas week. American military commissaries overseas honor
manufacturers coupons for up to six months past the expiration date.