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ales Promotion
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Sales promotion describes incentives and rewards to get customers to
buy now rather than later. Whereas advertising is a long-run tool for
shaping the market’s attitude toward a brand, sales promotion is a
short-term tool to trigger buyer action. No wonder brand managers
increasingly rely on sales promotion, especially when falling behind
in achieving sales quotas. Sales promotions work! Sales promotions
yield faster and more measurable responses in sales than advertising
does. Today the split between advertising and sales promotion may
be 30–70, the reverse of what it used to be.
The growth of sales promotion reflects the higher priority com-
panies are attaching to current sales than to long-term brand build-
ing. It is a return to transaction marketing (TM) rather than
relationship marketing (RM).
Sales promotion can be directed at retailers, consumers, and the
sales force. Retailers will work harder if offered price-offs, advertising
and display allowances, and free goods. Consumers are more likely to
buy in response to coupons, rebates, price packs, premiums, patron-
age awards, contests, product demonstrations, and warranties. The
sales force operates more vigorously in response to contests with
prizes for superior performance.
Because of the variety of sales promotion tools, marketers need
experience in knowing which to use. Some large companies have a
sales promotion specialist who can advise brand managers. Or the
company can engage the services of a specialist sales promotion
agency. The main need is to not only use promotions but to review
and record results so that the company can improve its sales promo-
tion efficiency over time.
Although most sales promotions increase sales, most lose
money. One analyst estimated that only 17 percent of a given set of

sales promotion campaigns were profitable. These are the cases
where the sales promotion brings in new customers to sample the
product and where they like the new product better than their previ-
ous brand. But many sales promotions only attract brand switchers
looking for a lower price, who naturally abandon the brand when an-
other brand goes on sale. Sales promotions are less likely to entice
away loyal users of other brands.
Thus sales promotions work poorest in product markets of high
brand similarity. They tend to attract brand switchers who are look-
ing for low price or premiums and who won’t be loyal to a brand. It
is better to use sales promotions in product markets of high dissimi-
larity where new customers may find that they like your product and
its features better than their previous choice.
Sales promotions tend to be used more by weaker and smaller
brands than stronger brands. Smaller brands have fewer funds to
spend on advertising, and for a small cost they can get people to at
least try their product.
Sales promotions in general should be used sparingly. Incessant
prices off, coupons, deals, and premiums can devalue the brand in
the consumers’ minds. They can lead customers to wait for the next
promotion instead of buying now.
Companies are forced to use more sales promotion than they
want by the trade. The trade demands discounts and allowances as
a condition for putting the product on the shelf. The trade may
Sales Promotion
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demand consumer promotions also. So many companies have little
choice but to comply.
Prefer sales promotions that agree or enhance your brand image
and add value. Try to use sales promotions with advertising. Adver-

tising explains why the customer should buy the product, and sales
promotion provides the incentive to buy. When used together, ads
and sales promotions make a powerful combination.
egmentation
In the past, companies such as Sears or Coca-Cola, when asked who
their customer is, would answer “Everybody.” But a marketer can
rarely satisfy everyone in a market. Not everyone will like the same
camera, car, cafeteria, or concert. Therefore, marketers must start by
dividing up the market.
Companies that moved away from mass market thinking started
by identifying large market segments. Procter & Gamble, in selling its
Duncan Hines cake mix, would define the target market as “married
women between the ages of 35 and 50 with families.” Later compa-
nies moved from large segments to narrower niches. Estée Lauder
might design a product for “black American professional women be-
tween the ages of 25 and 35.” Finally, some companies have moved
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to the ultimate segmentation scheme, segments of one, namely indi-
vidual customers.
Today more companies are guilty of undersegmentation than
oversegmentation. They imagine more high-potential prospects for
their offerings than really exist. The antidote is to divide the market
into several levels of potential. The first level consists of those cus-
tomers who would be the most responsive to the offering. This
group should be profiled in terms of their demographic and psycho-
graphic characteristics. Then a secondary group and a tertiary group
should be defined. The company should then focus its initial selling
on its primary prospects; if they don’t respond, the company either
has mis-segmented or its offering is of little interest.

Segments can be identified in three ways. The traditional ap-
proach is to divide the market into demographic groups, such as
“women between the ages of 35 and 50.” This has the advantage of
ease of reaching this group. Its disadvantage is that there is no reason
to believe that women in this group have similar needs or readiness
to buy. Demographic segmentation is more about identifying a pop-
ulation sector than a population segment.
The second approach is to segment the market into need groups,
such as “women who want to save time in shopping for food.” This
is a clear need that can be met by a number of solutions, such as a su-
permarket taking telephone orders or Web orders that would be de-
livered to the home. The hope would be to identify demographic or
psychographic characteristics of such women, such as being more
highly educated or having a higher income.
The third approach is to segment the market by behavior groups,
such as “women who order their food from Peapod and other home
delivery groups.” This group is defined by their actual behavior, not
just needs, and the analyst can then search for common characteris-
tics that they may have.
Once you identify a distinct segment, the question is whether it
should be managed within the existing organization or deserves to
Segmentation
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be set up as a separate business. In the latter case, Nirmalya Kumar
calls it a strategic segment. For example, food companies such as Kraft
and Unilever focus primarily on their retail sales and only secondarily
on food service systems. But food service requires different quanti-
ties, packages, and selling systems. It is a strategic segment and
should be run independently of the food retailing group and manage
its own strategy and requirements.

elling
“Everyone lives by selling something,” noted the novelist Robert
Louis Stevenson. People are selling either a product, a service, a
place, an idea, information, or themselves.
Cynics view selling is a form of civilized warfare fought with
words, ideas, and disciplined thinking. And they view marketing as
an effort to add an element of dignity to what is otherwise a vulgar
brawl.
There are many images of selling. The YTS school says that sell-
ing consists of “yell, tell, and sell.” The S&P school says selling is
“spray and pray,” The LGD school says that selling is “lunch, golf,
and dinner.” And the salesperson is described as a “talking brochure.”
There is the well-known story of the Stanley Works in which a
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consultant told the tool company, “You are not in the business of
selling drills. You are in the business of selling holes.” Don’t sell fea-
tures. Sell benefits, outcomes, and value.
Some individuals are gifted salespeople. They can sell refrigera-
tors to Eskimos, fur coats to Hawaiians, sand to Arabs, all at a profit,
and then repurchase them at a discount.
Good salespeople remember that they are born with two ears
and one mouth. This reminds them that they should be doing twice
as much listening as talking. If you want to lose the sale, make a pitch
to the customer.
Some salespeople can be painful bores. Woody Allen lamented:
“There are worse things in life than death. Have you ever spent
an evening with an insurance salesman?”
Salespeople must get used to being rejected. Dennis Tamcsin of
Northwestern Mutual Life Insurance observed: “We have some-

thing in this industry called the 10-3-1 ratio. This means that
for every 10 calls a salesperson makes, he will only get to make a
presentation to three, and if he’s got a good success rate, he’ll
make one sale. We need people who won’t shrink from that kind
of rejection.”
IBM trains its salespeople to act as if they are always on the
verge of losing every customer.
What makes a successful salesperson? To succeed, a salesperson
must recognize that the first person he or she has to sell to is himself
or herself. His job is to get in touch with the buyer within himself.
And his motto should be: “I develop clients, not sales.”
The comedian George Burns had his own opinion about what
makes a successful salesperson: “The most important thing in rela-
tionship selling is honesty and integrity. If you can fake them,
you’ve got it made.”
Here is a story that illustrates the difference between great sales-
people and average salespeople.
Selling
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This illustrates that effective marketing involves careful research
into the market opportunity and the preparation of financial esti-
mates based on the proposed strategy indicating whether the returns
would meet or exceed the company’s financial objectives.
In the past, a gifted salesperson was one who could “commu-
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A Hong Kong shoe manufacturer wondered whether a market
existed for his shoes on a remote South Pacific island. He sent
an order taker to the island who, upon a cursory examination,
wired back: “The people here do not wear shoes. There is no

market.” Not convinced, the Hong Kong manufacturer sent a
salesperson to the island. This salesperson wired back: “The
people here don’t wear shoes. There is a tremendous market.”
Afraid that this salesrep was being carried away by the sight
of so many shoeless feet, the manufacturer sent a third per-
son, a marketer. This marketing professional interviewed the
tribal chief and several natives and wired back:
“The people here don’t wear shoes. As a result their feet are
sore and bruised. I have shown the chief how shoes would
help his people avoid foot problems. He is enthusiastic. He es-
timates the 70 percent of his people will buy the shoes at $10 a
pair. We probably can sell 5,000 pairs of shoes in the first year.
Our cost of bringing the shoes to the island and setting up dis-
tribution would amount to $6 a pair. We will clear $20,000 in the
first year, which, given our investment, will give us a rate of re-
turn on our investment (ROI) of 20 percent, which exceeds our
normal ROI of 15 percent. This is not to mention the high value
of our future earnings by entering this market. I recommend
that we go ahead.”
nicate value.” But as products have become more similar, each
competitive salesperson delivers essentially the same message. So
the new need is for the salesperson who can “create value” by
helping the customer make or save more money. Salespeople must
move from persuading to consulting. This can take the form of
providing technical help, solving a difficult problem for the cus-
tomer, or even helping the customer change its whole way of do-
ing business.
ervice
In an age of increasing product commoditization, service quality is
one of the most promising sources of differentiation and distinc-

tion. Giving good service is the essence of practicing a customer
orientation.
Yet many companies view service as a pain, a cost, as something
to minimize. Companies rarely make it easy for customers to make
inquiries, submit suggestions, or lodge complaints. They see provid-
ing service as a duty and an overhead, not as an opportunity and a
marketing tool.
Every business is a service business. You are not a chemical
company. You are a chemical services business. Theodore Levitt
said: “There is no such things as service industries. There are
Service
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