Chapter 12 Promotion Through the Marketing Channel.

Chapter 12Chapter 12

Promotion Through the Marketing Channel

• Why is channel member support one of the major focal points of the manufacturer's promotional mix?

– Most products are not sold direct to the final consumer and thus must be supported by the channel members in order to achieve the channel manager’s distribution objectives

1212Channel Member SupportChannel Member Support

Objective 1:

• Pull Strategies– Building strong consumer demand for a product to

force members in to promoting the product because it’s in their best interest to do so.

• Push Strategies– Focus on mutual effort & cooperation in the

development & implementation of promotional strategies by working directly with members in order to foster support.

1212““Push” vs. “Pull” StrategiesPush” vs. “Pull” Strategies

Objectives 2:

1212Promotional StrategiesPromotional Strategies

Objective 3:

Pull Strategy

Manufacturer

Channel members

Final users(consumer or industrial)

Final users(consumer or industrial)

Channel members

Manufacturer

Push Strategy

1* 2 3

*Numbers indicate sequence of flows† Sequence of flows is simultaneous

†

Promotion flowNegotiation flowProduct flow

• Favorable reception of one’s promotional strategy is enhanced when…

1. Promotional strategies used support members’ needs rather than simply focus on selling

2. Members are included during the development & implementation of promotional campaigns

1212Promotional ThroughPromotional Through

Channel MembersChannel Members

Objective 4:

• Ad-hoc, quick-fix, and frequently offered push promotions do not foster high levels of channel member support on a consistent basis.

1212““Push” PromotionPush” Promotion

Research Findings - #1Research Findings - #1

Objective 5:

• Push promotions should be viewed as part of strategic channel management rather than as a mere tactical action to elicit quicker channel member response to sell more product.

1212““Push” PromotionPush” Promotion

Research Findings - #2Research Findings - #2

• Given the wide range of factors that can affect channel members’ responses to promotions, manufacturers should study channel members’ needs carefully before launching major push promotions.

1212““Push” PromotionPush” Promotion

Research Findings - #3Research Findings - #3

• Post-promotion (i.e., follow-up) research to evaluate channel member response to a push promotion is needed if manufacturers expect to make steady progress in improving the effectiveness of future push promotions.

1212““Push” PromotionPush” Promotion

Research Findings - #4Research Findings - #4

• Despite the manufacturer’s best efforts, large and powerful channel members will inevitably come into conflict with the manufacturer over promotional issues because their interests and goals will at times diverge.

1212““Push” PromotionPush” Promotion

Research Findings - #5Research Findings - #5

1. Cooperative Advertising

2. Promotional Allowances (i.e., “Monies”)

3. Slotting Fees

4. Displays & Selling Aids

5. In-store Promotions

6. Contests & Incentives

7. Special Promotional Deals & Merchandising Campaigns

1212Basic “Push” PromotionBasic “Push” Promotion

StrategiesStrategies

Objective 6:

• Typical Strategy:– Sharing in the cost on a 50/50 basis up to some

percentage of the retailer’s purchases

• Administration:– Administration is necessary to avoid abuses & to

help secure cooperation from members– Must be sensitive to channel members’ primary

concern about this strategy• Which is?

1212Cooperative AdvertisingCooperative Advertising

• Typical Strategy:– Offering members a direct cash payment or a

certain percentage of the purchases on particular products

• Administration:– Should conduct research to determine whether

it is getting its money’s worth in terms of retailer cooperation and follow-through

1212Promotional AllowancesPromotional Allowances

or “Monies”or “Monies”

• Typical Strategy:– Payments made to persuade the member,

especially retailers, to stock, display, and support new products

• Administration:– Joint sponsorship of research between retailers

and manufacturers on effects of slotting fees on various topics could help alleviate conflict.

1212Slotting FeesSlotting Fees

• Typical Strategy:– Include point-of-purchase (POP) displays,

dealer identification signs, promotional kits, special in-store signage, & mailing pieces

• Administration:– Should make the effort to see whether the

firm’s selling aids and displays are serving any useful purpose and/or are even being used.

1212Displays & Selling AidsDisplays & Selling Aids

• Typical Strategy:– Short-term events designed to create added

interest and excitement for the manufacturer’s product(s).

• Administration:– Planning of a successful in-store promotion

should always include considerations of the potential benefits for the retailers involved.

1212In-Store PromotionsIn-Store Promotions

• Typical Strategy:– Any techniques that are used to stimulate

channel member sales efforts for one’s products.

• Administration:– Must consider members’ views towards this

form of promotion when determining the type of contest or incentive to run.

1212Contests & IncentivesContests & Incentives

• Typical Strategy:– Includes a variety of push-type promotional deals

such as discounts to members to encourage the to order more products.

• Administration:– Must carefully develop strategies that are based on

knowledge of the member’s needs and that take a long-term perspective on promotion through the channel.

1212Special Promotional Deals & Special Promotional Deals & Merchandising CampaignsMerchandising Campaigns

• Include:– Training Programs

– Quota Specification

– Missionary Selling

– Trade Shows

1212““Kinder & Gentler”Kinder & Gentler”Push PromotionsPush Promotions

Objective 7 & 8:

• Wholesalers– Help develop their knowledge & selling

techniques for customers they call on

• Retailers– Help develop knowledge & selling techniques

so as to instruct customers on product usage.

• Pro’s and Con’s– Can help offset costs of training, but– Often little time for training

1212Training ProgramsTraining Programs

• Definition:– Sales volumes that manufacturers specify for

members to generate during a certain time period.

• Pro– Can amount to a substantial sum & can make a

major different in the dealer’s overall profit

• Cons– If seen as coercive, it can produce ill will and

conflict– Members may ignore quota if line is not a major

portion of their product mix

1212Quota SpecificationQuota Specification

• Definition:– Manufacturer’s salespeople who are specially

assigned to supplement the selling activities of the member.

• Pro– Useful when members lack sales capacity to handle

tasks assigned to them

• Cons– Expensive to implement– Some members view these salespeople as intruding

on the time of their own sales force

1212Missionary SellingMissionary Selling

• Definition:– Annual events organized by associations in particular

industries

• Pros– Opportunity for manufacturers to

• Sell existing & new channel members substantial quantities on new products face-to-face

• Socialize with channel members• Create a sense of pride & belonging within the channel by its

members

1212Trade ShowsTrade Shows