Presentation on theme: "Part 5: Principles: How to Win the Battle of the Buzz"— Presentation transcript:
1 Part 5: Principles: How to Win the Battle of the Buzz Sales Promotion, Events, and SponsorshipsPart 5: Principles: How to Win the Battle of the BuzzChapter 16
2 Questions We’ll Answer CHAPTER KEY POINTSQuestions We’ll AnswerWhich 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 PROMOTIONWhat 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 PROMOTIONChanges in the IndustryIn 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 GrowthPressure for short-term profitsRising cost of mass (traditional) mediaNeed for accountabilitySales promotions are easy to track and evaluateEscalation of traditional media costsPromotions cost less and deliver tangible resultsEasier and quicker to determine if objectives have been metUsually, there’s an immediate responseFor consumer, risk is reducedAdded value from coupons, rebates, discounts
6 Growth from Marketplace Changes THE PRACTICE OF SALES PROMOTIONGrowth from Marketplace ChangesConsumer behaviorShoppers switch more easilyPricingConsumers expect coupons, sales, discountingMarket shareIncreased switching leads to increased market shareParity productsPromotions can distinguish between similar productsPower of the retailerWal-Mart, Home Depot, Toys “R” Us and others demand promotional incentives
7 Categories of Sales Promotion THE PRACTICE OF SALES PROMOTIONCategories of Sales PromotionConsumerTargeted to consumer: people like you and meTradeTargeted to people/companies in the distribution channel such as buyers, brokers, distributors, wholesales, dealers, franchisees, retailers, etc.Sales ForceDirected 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 priceCents-off dealPrice-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 productRetailer: redeemable only at their outletManufacturer: at any outlet carrying the product
9 Types of Consumer Promotions Refunds and RebatesMarketers offer to return a certain amount of money to the consumer who purchases the product (or coupon to encourage repeat use).SamplingAllowing the consumer to try the product or service (in-store, mailed, dentist office, newspaper).
10 Types of Consumer Promotions Contests and SweepstakesCreate 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.SpecialtiesPresents the brand’s name on something that is given away as a reminderKey chains, pens, calendars, tote bags, coffee mugs.
11 Types of Consumer Promotions PremiumsTangible reward for a particular actWork by adding value to the productStore premiums: given at retail siteIn-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 AwarenessMcDonalds “movie” toysTrialGet the right people involved with the product through sampling, price deals, coupons, refunds, rebatesMaintain/increase market shareConvince people to switchPrice deals work with low-loyalty productsCharacters on premiums associate the brand with the characterBrand reminderRemind 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) KitsMaterials 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 DealsWhen 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 ContestsAdvertisers 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 ExhibitsWhen 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 DemandPull 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.AttentionPOPs get attention and stimulate impulse purchasesMotivationContests, trade deals, and other incentives motivate trade/channel members to make sales.InformationTrade 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 relationsSponsorshipsEvent marketingInteractive and Internet promotionsLoyalty programsComarketing/partnership promotions
20 Sponsorships and Event Marketing CROSSOVER PROMOTIONSSponsorships and Event MarketingSponsorships 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 PROMOTIONSOther Promotional SupportBlimps, balloons, inflatables, and skywriting planes capture attention and create excitement at events.Goodyear BlimpMet Life’s Snoopy blimpsInflatable Spiderman to promote the movieInternet sweepstakesInternet coupons
22 Loyalty Programs Also called a continuity or frequency program CROSSOVER PROMOTIONSLoyalty ProgramsAlso called a continuity or frequency programA promotion to increase customer retentionFrequent 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 STRATEGYPromotion ObjectivesIntroduce a new productCreate brand awarenessBrand buildingCreate affinity between brands and buyersCreate brand involvement through positive associations
25 The Issue of Brand Building PROMOTION STRATEGYThe Issue of Brand BuildingBrand 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 STRATEGYPromotion IntegrationAdvertising 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.AdvertisingCreates a brand image over timeRelies on emotional appealsAdds tangible value to product or service through imageContributes moderately to short-term profitabilityPromotionCreates immediate actionAdded value strategies rely on rational appeals; impulse appeals use emotionAdds tangible value to product or serviceContributes greatly to short-term profitability
27 Promotion Effectiveness PROMOTION STRATEGYPromotion EffectivenessEffectiveness 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.