1. 16 MKTG CHAPTER Lamb, Hair, McDaniel 2007-2008
Chapter 16 Sales Promotion and Personal Selling
MKTG
Lamb, Hair, McDaniel 16
CHAPTER
Sales Promotion and Personal Selling
Designed by
Amy McGuire, B-books, Ltd.
Prepared by
Deborah Baker, Texas Christian University

2. Learning Outcomes LO1 LO2 LO3 LO4
Chapter 16 Sales Promotion and Personal Selling
Learning Outcomes
Define and state the objectives of sales promotion
Discuss the most common forms of consumer sales promotion
List the most common forms of trade sales promotion
Describe personal selling
LO1
LO2
LO3
LO4

3. Learning Outcomes LO5 LO6
Chapter 16 Sales Promotion and Personal Selling
Learning Outcomes
Discuss the key differences between relationship selling and traditional selling
List the steps in the selling process
LO5
LO6

4. the objectives of sales promotion
Chapter 16 Sales Promotion and Personal Selling
Sales Promotion
LO1
Define and state
the objectives of sales promotion

5. Sales Promotion LO1 Sales Promotion
Chapter 16 Sales Promotion and Personal Selling
Sales Promotion
Sales Promotion
Marketing communication activities, other than advertising, personal selling, and public relations, in which a short-term incentive motivates a purchase.
Notes:
In addition to advertising, public relations, and personal selling, sales promotion is utilized to increase the effectiveness of other promotional efforts.
Sales promotion provides an incentive for consumers to purchase a good or service immediately, either by lowering the price or by adding value.
LO1

6. Sales Promotion LO1 Advertising Reason to buy Sales Promotion
Chapter 16 Sales Promotion and Personal Selling
Sales Promotion
Advertising
Reason to buy
Sales Promotion
Incentive to buy
Notes:
While advertising offers a reason to buy, sales promotion offers an incentive to buy. Both are important, but sales promotion is usually cheaper and easier to measure.
For example, a national TV ad often costs a total of over $5 million, and it is difficult to determine how many people purchase a product as a result of seeing the ad. With sales promotion, it is easy to measure the number of coupons redeemed or the number of contest entries.
LO1

7. Consumer Sales Promotion
Chapter 16 Sales Promotion and Personal Selling
Sales Promotion
Consumer Sales Promotion
Trade
Sales Promotion
Consumer market
Marketing channel
Drive immediate purchase Influence behavior
Goal
Notes:
Sales promotion is targeted toward either of two different markets: to consumers or to members of the marketing channel (“trade”), such as wholesalers and retailers.
Sales promotion expenditures have increased over the last several years as a result of increased competition, an expanding array of media choices, the demand for more deals from manufacturers, and the reliance on accountable and measurable marketing strategies.
Promotion marketing in the U.S. exceeds $300 billion a year. Even power companies and restaurants have discovered the power of sales promotion.
LO1

8. Objectives of Sales Promotion
Chapter 16 Sales Promotion and Personal Selling
Objectives of Sales Promotion
Type of Buyer
Loyal Customers
Competitor’s
Customers
Brand Switchers
Price Buyers
Desired Results
Reinforce behavior
Increase consumption
Change purchase timing
Break loyalty
Persuade to switch
Persuade to buy your brand more often
Appeal with low prices
Supply added value
Sales Promotion Examples
Loyalty marketing
Bonus packs
Sampling
Sweepstakes, contests, premiums
Price-lowering promotion
Trade deals
Coupons, price-off packages, refunds
Notes:
The objectives of a promotion depend on the behavior of target consumers, as shown in Exhibit 16.1.
LO1

9. REVIEW LEARNING OUTCOME
Chapter 16 Sales Promotion and Personal Selling
REVIEW LEARNING OUTCOME
LO1
The Objectives of Sales Promotion

10. Tools for Consumer Sales Promotion
Chapter 16 Sales Promotion and Personal Selling
Tools for Consumer Sales Promotion
LO2
Discuss the most common forms of consumer sales promotion

11. Tools for Consumer Sales Promotion
Chapter 16 Sales Promotion and Personal Selling
Tools for Consumer Sales Promotion
Coupons and Rebates
Premiums
Loyalty Marketing Programs
Contests & Sweepstakes
Sampling
Point-of-Purchase Promotion
Notes:
The tools selected for sales promotion must suit the objectives to ensure success of the overall promotion plan.
Popular tools are shown here, and described on the following slides.
LO2

12. Tools for Consumer Sales Promotion
Chapter 16 Sales Promotion and Personal Selling
Tools for Consumer Sales Promotion
Coupon
Rebate
Premium
A certificate that entitles consumers to an immediate price reduction.
A cash refund given for the
purchase of a product during
a specific period.
An extra item offered to the consumer, usually in exchange for some proof of purchase.
Notes:
Coupons encourage product trial and repurchase, and are likely to increase the amount of a product purchased.
Coupon distribution has been growing, with almost 350 billion coupons distributed to U.S. households annually. This does not include Internet and in-store coupons. Increased competition and the introduction of 1200 new products each year have contributed to this trend.
Coupons promoting new-product use are likely to stimulate purchases.
Even though redemption rates are low for coupons, marketers are reevaluating the use of coupons, such as shortening the expiration time, using everyday low pricing instead, or distributing single, all-purpose coupons for redemption on several brands. In-store coupons are more likely to influence buying decisions and are redeemed 15 times more frequently than newspaper coupons.
Rebates must be mailed in along with a proof of purchase. Rebates offer price cuts to consumers directly and are more easily controlled. Further, customer databases can be built due to the information forms required for rebates.
Premiums reinforce the purchase decision, increase consumption, and persuade nonusers to switch brands.
Discussion/Team Activity:
Identify companies who have utilized these popular sales promotion tools.
Examples: fast food services, cosmetic companies, banks, rental cars, magazines, computer manufacturers, cell phones, etc.
LO2

13. Premiums
Premiums provide consumers with a reason to choose one brand over another.

14. Tools for Consumer Sales Promotion
Chapter 16 Sales Promotion and Personal Selling
Tools for Consumer Sales Promotion
Loyalty
Marketing
Program
A promotional program designed
to build long-term, mutually beneficial relationships between
a company and key customers.
Frequent
Buyer
A loyalty program in which loyal consumers are rewarded for
making multiple purchases.
Notes:
Loyalty marketing programs reward consumers for making multiple purchases. These programs enable companies to invest sales promotion dollars in activities designed to capture greater profits from customers already loyal to the product/company.
The objective of loyalty marketing is to build long-term, mutually-beneficial relationships. Studies show that frequent shopper programs require something more than just discounts to build loyalty. Furthermore, customers are “loyal” to more than one store, and participate in multiple programs.
Discussion/Team Activity:
Identify several companies that offer these programs. Discuss the benefits offered by some of the more popular loyalty marketing and frequent buyer programs.
LO2

15. Tools for Consumer Sales Promotion
Chapter 16 Sales Promotion and Personal Selling
Tools for Consumer Sales Promotion
Contests
Promotions that require skill or ability to compete for prizes.
Sweepstakes
Promotions that depend on chance or luck, with free participation.
Online
Sweepstakes Online
How do online sweepstakes sites compare to the kind of sweepstakes entries you receive in the mail? Visit the popular sweepstakes site Sweepstakesonline.com. Do any of the contests interest you? Do you think the pitches online are ethical? Why or why not?
Notes:
Contests and sweepstakes are designed to create interest in a good or service, often to encourage brand switching.
They are not effective tools for generating long-term sales. Furthermore, the award must appeal to the target market. Offering several smaller prizes instead of one huge prize will increase the effectiveness of a promotion.
Online
LO2

16. Contests like this one encourage consumers to purchase more
Chapter 16 Sales Promotion and Personal Selling
Contests like this one encourage consumers to purchase more

17. Sweepstakes rely on chance
Chapter 16 Sales Promotion and Personal Selling
Sweepstakes rely on chance

18. Tools for Consumer Sales Promotion
Chapter 16 Sales Promotion and Personal Selling
Tools for Consumer Sales Promotion
Sampling
A promotional program that allows the consumer the opportunity to try a product or service for free.
Notes:
Sampling allows the risk-free trial of a product.
Sampling can increase retail sales by as much as 40 percent. As a result, sampling has increased by more than 20 percent annually in recent years.
Sampling at special events is popular, effective, and a high profile method that permits marketers to piggyback onto fun-based consumer activities.
LO2

19. Samples

20. Methods of Sampling LO2 Direct mail Door-to-door delivery
Chapter 16 Sales Promotion and Personal Selling
Methods of Sampling
Direct mail
Door-to-door delivery
Packaging with another product
Retail store demonstration
Discussion/Team Activity:
Discuss some of the occasions that you have had the opportunity to participate in product sampling. How did this influence your decision to purchase the sampled product?
What methods are most effective in reaching college students?
LO2

21. Point-of-Purchase Promotion
Chapter 16 Sales Promotion and Personal Selling
Point-of-Purchase Promotion
Build traffic
Advertise the product
Induce impulse buying
Notes:
Point-of-purchase promotions (P-O-Ps) include shelf “talkers”, shelf extenders, ads on carts and bags, end-aisle and floor-stand displays, TV monitors and in-store messages, and audiovisual displays.
P-O-Ps offer manufacturers a captive audience in retail stores, and can boost sales by as much as 65 percent because between 70 and 80 percent of all retail purchase decisions are made in-store.
LO2

22. Point of Purchase

23. Online Sales Promotion
Chapter 16 Sales Promotion and Personal Selling
Online Sales Promotion
Effective Types of Online Sales Promotion
Free merchandise
Sweepstakes
Free shipping with purchases
Coupons
Notes:
Online sales promotions have grown due to the popularity of the Internet, generating three to fives times higher response rates than those of off-line counterparts. The most effective types are shown here.
Internet retailers are eager to boost traffic and give away free services or equipment to lure consumers not only to the Web site but to the Internet in general.
Online versions of loyalty programs are gaining popularity, and the most successful are those run by hotel and airline companies.
LO2

24. REVIEW LEARNING OUTCOME
Chapter 16 Sales Promotion and Personal Selling
REVIEW LEARNING OUTCOME
LO2
Consumer Sales Promotion
Coupons and rebates
Premiums
Loyalty marketing programs
Contests
Sampling
P-O-P
Online

25. Tools for Trade Sales Promotion
Chapter 16 Sales Promotion and Personal Selling
Tools for Trade Sales Promotion
LO3
List the most common forms of trade sales promotion

26. Conventions & Trade Shows
Trade Sales Promotion
Chapter 16 Sales Promotion and Personal Selling
LO3
Trade Allowances
Push Money
Training
Free Merchandise
Store Demonstration
Conventions & Trade Shows
Notes:
While consumer promotions pull a product through the channel by creating demand, trade promotions push a product through the distribution channel in an attempt to influence supply.
Consumer promotion tools are used when selling to members of the distribution channel, as well as tools that are unique to manufacturers and intermediaries, shown on this slide.

27. Trade Allowance LO3 Trade Allowance
Chapter 16 Sales Promotion and Personal Selling
LO3
Trade Allowance
A price reduction offered by manufacturers to intermediaries, such as wholesalers and retailers.

28. Push Money LO3 Push Money
Chapter 16 Sales Promotion and Personal Selling
LO3
Push Money
Money offered to channel intermediaries to encourage them to “push” products--that is, to encourage other members of the channel to sell the products.

29. Benefits of Trade Promotions
Chapter 16 Sales Promotion and Personal Selling
LO3
Help manufacturers gain new distribution
Obtain wholesaler and retailer support for consumer sales promotions
Build or reduce dealer inventories
Improve trade relations
Notes:
Trade promotions are popular among manufacturers for many reasons, as shown on this slide.

30. REVIEW LEARNING OUTCOME
Chapter 16 Sales Promotion and Personal Selling
REVIEW LEARNING OUTCOME
LO3
Forms of Trade Sales Promotion

31. Describe personal selling
Chapter 16 Sales Promotion and Personal Selling
Personal Selling
LO4
Describe personal selling
Notes:
Personal selling is direct communication between a sales representative and prospective buyers in an attempt to influence each other in a purchase situation.
In a sense, all businesspeople are salespeople, and to reach the top in most organizations, individuals need to sell ideas to peers, superiors, and subordinates.
Many business or marketing majors, as well as non-business majors, will start their professional careers in sales.

32. Personal Selling LO4 Personal Selling is more important if...
Chapter 16 Sales Promotion and Personal Selling
Personal Selling
Personal Selling is more important if...
Advertising & Sales Promotion are more important if...
Customers are
concentrated.
Product is technically complex.
There are few customers.
Product is custom made.
Product has a high value.
geographically dispersed.
Product is simple to understand.
There are many customers.
Product is standardized.
Product has a low value.
Notes:
Exhibit 16.2 compares the effectiveness of personal selling and advertising/sales promotion based on certain customer and product characteristics.
Personal selling is more important as the number of potential customers decrease, as the complexity of the product increases, and as the value of the product grows.
LO4

33. REVIEW LEARNING OUTCOME
Chapter 16 Sales Promotion and Personal Selling
REVIEW LEARNING OUTCOME
LO4
Personal Selling
Detailed explanation or demonstration
Variable sales message
Directed to qualified prospects
Controllable adjustable selling costs
More effective than other promotion in obtaining sale and gaining customer satisfaction
Personal Selling Advantages
Notes:
Personal selling offers several advantages over other forms of promotion, as shown on this slide.