1. Chapter 15
Sales Promotions

2. Sales Promotion
“Sales Promotion is a Marketing Discipline that Utilizes a Variety of Incentive Techniques to Structure Sales-Related Programs Targeted to Consumers, Trade, and/or Sales Levels that Generate a Specific, Measurable Action or Response for a Product or Service.”

3. Reasons for the Growth of Sales Promotion
Sales Managers are Under
Great Pressure to
Produce Results
Quickly.
Assessment of Sales
Promotion is
Relatively Easy.
Why Are Companies
Spending More and More
Money on Sales
Promotion?
Cost for Results
In This Industry Are
Relatively Low.
Sales Promotion
Strategies Target
Consumer, Trade, and
The Sales Force.

4. Promotion Strategies Promotion Can: Promotion Can’t:
Offer an immediate inducement,
Cause customers to try a product,
Persuade customers to buy again,
Introduce a new product or build a brand over time.
Promotion Can’t:
Create an image for a brand,
Compensate for a lack of advertising,
Do much to compensate for a negative image,
Reverse a sales decline.

5. Sales Promotion Strategies
Objectives
Intended to
Change Consumer
Behavior
Building Brands
Can be Used to Build
Brand Images, But
May be Long-Term
Introducing
New Products
Advertising and Promotion
Work Well Together
Here Using
Push & Pull
Strategies

6. Consumer-Oriented Promotions
Samples
Coupons
Consumer-
Oriented
Promotion
Premiums
Contests/sweepstakes
Refunds/rebates
Sampling - sampling involves a variety of procedures whereby consumers are given some quantity of a product for no charge to induce trial. Sampling is often used as a way of introducing a new brand to the market although it is also used for established products.
Couponing is the oldest, yet most widely used and effective sales promotions tool. As shown in the text, the number of coupons distributed to consumers has increased dramatically over the past decade and more than 7 billion are redeemed each year in the U.S.
A premium is an offer of an extra item of merchandise or service either free or at a low price that is used as an incentive for purchase. The two basic types of premiums are:
A contest is a promotion whereby consumers compete for prizes or money on the basis of skills or ability and winners are determined by judging entries against some predetermined criteria. Contests often provide a purchase incentive by requiring a proof of purchase to enter or to obtain an entry form from a dealer or advertisement. A sweepstakes is a promotion whereby winners are determined purely by chance and cannot require a proof of purchase as a condition for entry. Another form of a sweepstakes is a game which also has a chance element associated with winning.
Refunds and Rebates are offers to return some portion of the product purchase price after supplying some sort of proof or purchase. Consumers are generally responsive to refund or rebate offers, particularly as the size of the savings offer increases.
Bonus Packs offer the consumer an extra amount of a product at the regular price by providing larger containers or extra units. Here are some of the advantages and limitations of bonus packs:
Price-off Deals provide a reduction in the regular price of the brand, typically right on the package through specially marked price packs. Here are some of the advantages and limitations of price-off promotions:
Event Sponsorship are promotions whereby a company develops sponsorship relations with a particular event. Sponsorship of sporting events such as golf and tennis tournaments and car races are common among and many companies are sponsoring concert tours. Marketers are attracted to event sponsorship for many reasons including:
Bonus packs
Price-offs
Event sponsorship 2 2

7. Objectives of Consumer-Oriented Sales Promotion
Obtaining trial and repurchase
Increasing consumption of an established brand
Defending current customers
Targeting a specific market
Enhancing advertising and marketing efforts
Objectives for consumer-oriented sales promotion - As the use of sales promotion techniques continues to increase, companies must give consideration to what they hope to accomplish through their promotions and set clearly defined objectives and measurable goals for their sales promotional programs. While the basic goal of most sales promotion activities is to induce purchase of a brand, there are a number of different objectives the marketer might have for both new and established brands. These include: 3 3

8. Advantages of Coupons
Offers price reduction only to consumers who are price sensitive
Does not rely on retailers’ cooperation
Generates trial of a new brand
Encourages non-users to try an established brand or users to repeat use

9. Disadvantages of Coupons
Difficult to estimate redemption rates (<2%)
May be redeemed by loyal users who would buy anyway
Expensive
Misredemption and fraud
Cons:
It can be difficult to estimate how many consumers will redeem a coupon and when they will do so.
Coupons targeted to attract new users of established brands are often redeemed by previous loyal users.
Couponing programs can be expensive.
Problems of coupon misredemption and fraud exist. 5 5

10. Contests and Sweepstakes
Compete for a Prize Based
On Some Skill or Ability
Generates
High Degree
Of Consumer
Involvement
Can Help
Revive
Lagging
Sales
Participants Submit Names
To Be Included in Drawing
Game –
Type of Sweepstakes;
Time Frame Much
Longer

11. Advantages of Sweepstakes and Contests
Effective way of getting the consumer to become involved with the brand by making the promotion product relevant
Generate interest in or excitement over a brand and attracting attention to advertising
Effective way of dealing with specific marketing problems 6 6

12. Disadvantages of Contests and Sweepstakes
May overshadow the ad or brand
May detract from brand franchise or image
Legal problems and administration
Presence of professionals or hobbyists who may submit entries and detract from effectiveness 7 7

13. Station Break Go to the McDonald’s Web site at www.mcdonalds.com.
This site provides a variety of activities for visitors including contests and sweepstakes.
What is your view of contests or sweepstakes where children might be involved (notice that the Web site is oriented toward younger customers)?
What is the purpose of the contest or sweepstakes in this case?
Do they help sell the products? Discuss in class.

14. Refunds, Rebates, and Premiums
Refunds and Rebates
A Marketer’s Offer to Return a Certain Amount Of Money to the Consumer Who Purchases the
Product. i.e cash rebate + low-value coupon
Premiums
Tangible Reward for Performing a Particular Act.
Direct – Received
At Time of Purchase
Mail – Proof of
Purchase & Payment
Be Mailed In

15. Sampling Allowing the Customer to Experience the Product or Service.
Very Effective Strategy for Introducing
A New or Modified Product.
Most Common Method of Distributing
Samples is Through the Mail.
9 Out of 10 Customers Prefer a Sample
To a Cents-Off Coupon to Introduce
Product.

16. Trade Promotions
Trade advertising is directed at wholesalers and retailers and represents 50% of the total promotional spending.
Four goals of a trade promotion are:
Stimulate in-store merchandising or other trade support,
Manipulate levels of inventory held by wholesalers and retailers,
Expand product distribution to new areas of the country or new classes of trade,
Create a high level of excitement about the product among those responsible for its sale.

17. Types of Trade Promotions
Point-of-Purchase
Trade Deals
Retailer Kits
Trade Incentives
Contests
Exhibits
Sweepstakes
Trade Shows

18. Promotion Integration (Tab. 15.5)

19. Objectives of Trade-Oriented Sales Promotions
Obtain distribution for new products
Maintain trade support for established brands
Encourage retailers to display established brands
Build retail inventories 10 10

20. Point-of-Purchase Displays
Display Distributed to Retailers Used to Call
Customer’s Attention to Product Promotions.
Point-of-Purchase Displays
Some of the Most Popular POP Tools & Techniques
Mechanical Product
Dispensers
Price Cards
Signs
Banners
Special Racks
Carton Displays
$12 Billion Business; Second Largest Category of Sales Promo Expenditures.

21. Trade Promotions Contests & Sweepstakes Retailer (Dealer) Kits
Materials That Help Reps Make Sales Calls Are Often Designed as Kits.
Contain Detailed Product Specs, How-to-Do it Display, etc.
Trade Shows
& Exhibits
Advertisers Can Develop Contests & Sweepstakes to Motivate Resellers.
Occasional Use Only is Effective.
Allow Product Demonstrations, Provide Information, & Answer Questions.
$16.5 Billion is Spent Annually.

22. Trade Incentives and Deals
$8 to $12 Billion Business Annually Designed
for Special Trade Promotional Circumstances.
Trade Incentives and Deals
Incentive Programs
i.e. Used When Introducing
A New Product.
Types Include Bonuses &
Dealer Loadings
Trade Deals
Most Important Reseller Sales Promo Technique.
Types Include Buying & Advertising Allowances

23. Sponsorships and Event Marketing
Sponsorships include a number of activities including:
sports sponsorships,
entertainment tours and attractions,
festivals,
fairs, and annual events,
cause marketing – associating with an event that supports a social cause, and
arts.

24. Sponsorships and Event Marketing
Event marketing describes the marketing practice in which a brand is linked to an event to create experiences for customers and associate the brand personality with a certain lifestyle.
A sponsorship occurs when a company sponsors a sports event or concert, or supports a charity with its resources.
It is attempting to increase the perceived value of the sponsor’s brand in the consumer's mind.
Blimps, balloons, and inflatables are used at many events.

25. Specialty Advertising
Build Brands; Creating Both Awareness and Reminders
Includes Everything From Hats With Logos to T-shirts, & Mousepads
Third Largest
Category of
Promotional
Spending
Normally Have a Promotional Message Printed Somewhere