1. Part 5: Principles: How to Win the Battle of the Buzz
Sales Promotion, Events, and Sponsorships
Part 5: Principles: How to Win the Battle of the Buzz
Chapter 16

2. Questions We’ll Answer
CHAPTER KEY POINTS
Questions We’ll Answer
Which principles drive the use of sales promotion and what are some current trends?
How are various consumer promotions used?
What are the types and purposes of trade promotions?
How do other types of promotions—sponsorships and events, interactive promotions, loyalty programs, and co-marketing programs—work?
How are promotions used strategically in marketing in terms of brand building, new product launches, integration, and effectiveness?

3. What is sales promotion?
THE PRACTICE OF SALES PROMOTION
What is sales promotion?
When a marketer increases the value of its product or brand by offering an extra incentive to purchase it.
Designed to encourage action.
AMA: “The media and non-media marketing pressure applied for a predetermined, limited period of time at the level of consumer, retailer, or wholesaler in order to stimulate trial, increase consumer demand, or improve product availability.”
Sales promotion is primarily designed to motivate people to act by offering incentives.

4. Changes in the Industry
THE PRACTICE OF SALES PROMOTION
Changes in the Industry
In the past, advertising had dominated marketing spending.
Today, more than 2/3 of all firms plan promotions as part of their strategy.
Global incentive programs have increased dramatically; online promotions are growing at a rate of about 27% annually.

5. THE PRACTICE OF SALES PROMOTION
Reasons for Growth
Pressure for short-term profits
Rising cost of mass (traditional) media
Need for accountability
Sales promotions are easy to track and evaluate
Escalation of traditional media costs
Promotions cost less and deliver tangible results
Easier and quicker to determine if objectives have been met
Usually, there’s an immediate response
For consumer, risk is reduced
Added value from coupons, rebates, discounts

6. Growth from Marketplace Changes
THE PRACTICE OF SALES PROMOTION
Growth from Marketplace Changes
Consumer behavior
Shoppers switch more easily
Pricing
Consumers expect coupons, sales, discounting
Market share
Increased switching leads to increased market share
Parity products
Promotions can distinguish between similar products
Power of the retailer
Wal-Mart, Home Depot, Toys “R” Us and others demand promotional incentives

7. Categories of Sales Promotion
THE PRACTICE OF SALES PROMOTION
Categories of Sales Promotion
Consumer
Targeted to consumer: people like you and me
Trade
Targeted to people/companies in the distribution channel such as buyers, brokers, distributors, wholesales, dealers, franchisees, retailers, etc.
Sales Force
Directed at the firm’s salespeople to motivate them to increase their sales including training, sales presentations, support materials, incentives, performance bonuses, contests

8. Types of Consumer Promotions
Price Deals—temporary price reduction or sale price
Cents-off deal
Price-pack deals (something extra; prize in cereal box)
Bonus packs (25% more lotion)
Banded packs (toothpaste and brush)
Coupon — discount on the price of the product
Retailer: redeemable only at their outlet
Manufacturer: at any outlet carrying the product

9. Types of Consumer Promotions
Refunds and Rebates
Marketers offer to return a certain amount of money to the consumer who purchases the product (or coupon to encourage repeat use).
Sampling
Allowing the consumer to try the product or service (in-store, mailed, dentist office, newspaper).

10. Types of Consumer Promotions
Contests and Sweepstakes
Create excitement by promising “something for nothing” and offering impressive prizes.
Contests are based on skill or ability; you compete for prizes.
Sweepstakes are based on luck; send in your name for a drawing.
Specialties
Presents the brand’s name on something that is given away as a reminder
Key chains, pens, calendars, tote bags, coffee mugs.

11. Types of Consumer Promotions
Premiums
Tangible reward for a particular act
Work by adding value to the product
Store premiums: given at retail site
In-pack premiums (in the package)
On-pack premiums (attached to package)
Container premiums (package is premium)
Self-liquidating: mail payment with proof of purchase

12. How to Use Consumer Promotions
Awareness
McDonalds “movie” toys
Trial
Get the right people involved with the product through sampling, price deals, coupons, refunds, rebates
Maintain/increase market share
Convince people to switch
Price deals work with low-loyalty products
Characters on premiums associate the brand with the character
Brand reminder
Remind customers of positive experience with ad copy, specialty items, thank you gifts

13. What are trade promotions?
Trade—all those involved in the channel of distribution including buyers, brokers, distributors, wholesalers.
Marketers try to get the “trade” involved in promotions to make their marketing effort effective.
Trade promotions give channel members information about products and their selling points to encourage them to provide shelf space and push products.

14. Types of Trade Promotions
Point-of-Purchase Display (POP)
Manufacturers design and distribute displays to retailers to draw attention to their products.
Racks, display cartons, banners, signs, moving parts, lights, action.
Retail (Dealer) Kits
Materials that support retailer’s selling efforts or help representatives make sales calls on prospective retailing customers.
Product spec sheets, ad slicks/discs.

15. Types of Trade Promotions
Trade Incentives and Deals
When a manufacturer gives sellers a financial reward for purchasing a certain amount of product or supporting a promotion.
Includes special displays, extra purchases, superior store locations, more local promotion.
Retailers get special discounts, free goods, gifts, cash from manufacturer.
Advertising allowances: deals on coop advertising and deals for using promotional displays.

16. Types of Trade Promotions
Contests
Advertisers can develop contests and sweepstakes to motivate resellers.
Contests are far more common than sweepstakes because they can be more closely tied to product sales (exceeds the quota by the greatest percentage, win the contest).
Trade Shows and Exhibits
When companies in the same industry gather to present and sell their merchandise and demonstrate their products.

17. How to Use Trade Promotions
The two primary roles for a trade promotion:
Stimulating in-store merchandising or other trade support.
Creating excitement among those responsible for selling the product.
Trade promotions are also used to:
Manipulate wholesalers’ and retailers’ inventory levels.
Expand product distribution to new geographic areas or classes of trade.

18. How to Use Trade Promotions
Manipulate Demand
Pull strategies: creating or increasing customer demand so product is “pulled” through the channel.
Push Strategies: give channel members reasons to carry products or give them better shelf space so product is “pushed” through the channel.
Attention
POPs get attention and stimulate impulse purchases
Motivation
Contests, trade deals, and other incentives motivate trade/channel members to make sales.
Information
Trade show displays give information about products, allow companies to gather and compare products.

19. What are crossover promotions?
Promotions that cross over to other areas of marketing and blur the lines between promotion, advertising, and public relations
Sponsorships
Event marketing
Interactive and Internet promotions
Loyalty programs
Comarketing/partnership promotions

20. Sponsorships and Event Marketing
CROSSOVER PROMOTIONS
Sponsorships and Event Marketing
Sponsorships are when companies support an event, say a sporting event, concert, or charity either financially or by donating supplies and services.
Event marketing means building a product’s marketing program around a sponsored event, such as the Olympics or a golf tournament.

21. Other Promotional Support
CROSSOVER PROMOTIONS
Other Promotional Support
Blimps, balloons, inflatables, and skywriting planes capture attention and create excitement at events.
Goodyear Blimp
Met Life’s Snoopy blimps
Inflatable Spiderman to promote the movie
Internet sweepstakes
Internet coupons

22. Loyalty Programs Also called a continuity or frequency program
CROSSOVER PROMOTIONS
Loyalty Programs
Also called a continuity or frequency program
A promotion to increase customer retention
Frequent flyers programs, TGI Friday’s “Frequent Fridays”
These programs also capture information to use for more targeted promotions and advertising.

23. Partnership Programs CROSSOVER PROMOTIONS
Comarketing involves manufacturers developing marketing communication programs with their main retail accounts, instead of for them.
Cobranding occurs when two companies come together to offer a product (e.g., American Airlines, Citibank Visa).
With licensing, one company gives another company the right to use its legally protected trademarks and logos on products and in advertising or promotion.
Tie-ins are when two companies are displayed, advertised, or promoted together to multiply impact (e.g., McDonald’s Shrek Happy Meals).

24. Promotion Objectives Introduce a new product Create brand awareness
PROMOTION STRATEGY
Promotion Objectives
Introduce a new product
Create brand awareness
Brand building
Create affinity between brands and buyers
Create brand involvement through positive associations

25. The Issue of Brand Building
PROMOTION STRATEGY
The Issue of Brand Building
Brand building is long-term and focused on the brand’s core values, while promotion is short term and price-focused.
Critics say price promotions can undermine the brand’s established values and erode customer brand loyalty.
Proponents say promotion can help build brand image.
The solution: advertising must be more accountable and promotion more brand-focused; and they must work together.

26. Promotion Integration
PROMOTION STRATEGY
Promotion Integration
Advertising and promotion have different strengths that, when combined with other marketing communication tools, can effectively accomplish objectives.
Both seek to increase the number of customers and usage of the product by existing customers.
Advertising
Creates a brand image over time
Relies on emotional appeals
Adds tangible value to product or service through image
Contributes moderately to short-term profitability
Promotion
Creates immediate action
Added value strategies rely on rational appeals; impulse appeals use emotion
Adds tangible value to product or service
Contributes greatly to short-term profitability

27. Promotion Effectiveness
PROMOTION STRATEGY
Promotion Effectiveness
Effectiveness is measured by volume, response rates, and redemption (coupons, refunds, rebates) rates.
Payout planning seeks to produce promotions that increase sales and profits.
Promotions can deliver sales but they must be well planned and executed in order to enhance the brand’s reputation.

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Publishing as Prentice Hall