Point-of-Purchase Advertising

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Three key promotional tools are used by retailers: coupons, advertised specials and point-of-purchase displays. Point-of-purchase displays can range from simple "sale" signs to elaborate interactive displays. However, the objective of the display is generally the same—to prompt unplanned purchases.

POP displays stimulate sales by drawing attention to otherwise overlooked products; they also serve as a purchase reminder. They are commonly used for impulse-purchase items, such as cookies, crackers, salted snacks and beverages, and for infrequently purchased products, such as baking ingredients and condiments.

In recent decades, POP promotions have grown in importance because of the burgeoning number of brands and the increasing amount of money spent on unplanned purchases. A family of four spends 61% of its grocery dollars on unplanned purchases. Even when shoppers use a shopping list, the specific brand they choose is determined at the store in 73% of cases. More than half of these shoppers report that they are frequently influenced by POP displays.

While POP displays are often accompanied by sales promotions or coupons, they also have been shown to increase sales by themselves. Experiments suggest that retailers could generate increases in sales simply by placing a promotion sign (with no price cut) on the shelf. Such signs not only attract attention but also typically signal a "good deal," thereby encouraging purchase. In some circumstances, these displays can produce a "bandwagon effect"—that is, a decision to purchase because it seems everyone else is.

POP displays can reinforce an advertising message and provide a vivid comparison with competing brands. In effect, POP displays provide a brand-building opportunity that can be targeted to both first-time buyers and loyal users.

Certain kinds of POP displays tend to make consumers buy more than they otherwise would. Research has shown that nearly any sign with a number in it, suggesting that shoppers buy more than one of something ("Limit 6 per person," "Buy 12 for the weekend," "4 for $4"), is more effective in stimulating sales than signs without numbers. Several studies have documented this effect. For example, signs suggesting multiple purchases ("Buy 12 for the weekend") stimulated an increase in sales ranging from nearly 50% to more than 100% in a chain of Philadelphia convenience stores. Multiple-unit pricing—"3 for $3" rather than "$1 each"—increased sales in 12 of 13 categories in Chicago supermarkets by an average of 30%.

Even in the absence of a price promotion, signs that suggest an occasion for use of the product (e.g., "Buy some for snacks") showed surprising sales increases in a series of pilot studies done in truck stops across the Midwest.

POP displays take up store space, which becomes increasingly valuable as competition among brands intensifies. Many store managers are asked to accommodate more displays than they have space for, forcing advertisers to bid against each other for floor and shelf space. Compensation may take the form of a straight payment, special discounts or other terms that give a retailer sufficient incentive to provide the coveted space.

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