2Sales 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.”
3Reasons for the Growth of Sales Promotion Sales Managers are UnderGreat Pressure toProduce ResultsQuickly.Assessment of SalesPromotion isRelatively Easy.Why Are CompaniesSpending More and MoreMoney on SalesPromotion?Cost for ResultsIn This Industry AreRelatively Low.Sales PromotionStrategies TargetConsumer, Trade, andThe Sales Force.
4Promotion 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.
5Sales Promotion Strategies ObjectivesIntended toChange ConsumerBehaviorBuilding BrandsCan be Used to BuildBrand Images, ButMay be Long-TermIntroducingNew ProductsAdvertising and PromotionWork Well TogetherHere UsingPush & PullStrategies
6Consumer-Oriented Promotions SamplesCouponsConsumer-OrientedPromotionPremiumsContests/sweepstakesRefunds/rebatesSampling - 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 packsPrice-offsEvent sponsorship22
7Objectives of Consumer-Oriented Sales Promotion Obtaining trial and repurchaseIncreasing consumption of an established brandDefending current customersTargeting a specific marketEnhancing advertising and marketing effortsObjectives 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:33
8Advantages of CouponsOffers price reduction only to consumers who are price sensitiveDoes not rely on retailers’ cooperationGenerates trial of a new brandEncourages non-users to try an established brand or users to repeat use
9Disadvantages of Coupons Difficult to estimate redemption rates (<2%)May be redeemed by loyal users who would buy anywayExpensiveMisredemption and fraudCons: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.55
10Contests and Sweepstakes Compete for a Prize BasedOn Some Skill or AbilityGeneratesHigh DegreeOf ConsumerInvolvementCan HelpReviveLaggingSalesParticipants Submit NamesTo Be Included in DrawingGame –Type of Sweepstakes;Time Frame MuchLonger
11Advantages of Sweepstakes and Contests Effective way of getting the consumer to become involved with the brand by making the promotion product relevantGenerate interest in or excitement over a brand and attracting attention to advertisingEffective way of dealing with specific marketing problems66
12Disadvantages of Contests and Sweepstakes May overshadow the ad or brandMay detract from brand franchise or imageLegal problems and administrationPresence of professionals or hobbyists who may submit entries and detract from effectiveness77
13Station 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.
14Refunds, Rebates, and Premiums Refunds and RebatesA Marketer’s Offer to Return a Certain Amount Of Money to the Consumer Who Purchases theProduct. i.e cash rebate + low-value couponPremiumsTangible Reward for Performing a Particular Act.Direct – ReceivedAt Time of PurchaseMail – Proof ofPurchase & PaymentBe Mailed In
15Sampling Allowing the Customer to Experience the Product or Service. Very Effective Strategy for IntroducingA New or Modified Product.Most Common Method of DistributingSamples is Through the Mail.9 Out of 10 Customers Prefer a SampleTo a Cents-Off Coupon to IntroduceProduct.
16Trade PromotionsTrade 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.
17Types of Trade Promotions Point-of-PurchaseTrade DealsRetailer KitsTrade IncentivesContestsExhibitsSweepstakesTrade Shows
19Objectives of Trade-Oriented Sales Promotions Obtain distribution for new productsMaintain trade support for established brandsEncourage retailers to display established brandsBuild retail inventories1010
20Point-of-Purchase Displays Display Distributed to Retailers Used to CallCustomer’s Attention to Product Promotions.Point-of-Purchase DisplaysSome of the Most Popular POP Tools & TechniquesMechanical ProductDispensersPrice CardsSignsBannersSpecial RacksCarton Displays$12 Billion Business; Second Largest Category of Sales Promo Expenditures.
21Trade 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& ExhibitsAdvertisers 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.
22Trade Incentives and Deals $8 to $12 Billion Business Annually Designedfor Special Trade Promotional Circumstances.Trade Incentives and DealsIncentive Programsi.e. Used When IntroducingA New Product.Types Include Bonuses &Dealer LoadingsTrade DealsMost Important Reseller Sales Promo Technique.Types Include Buying & Advertising Allowances
23Sponsorships 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, andarts.
24Sponsorships 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.
25Specialty Advertising Build Brands; Creating Both Awareness and RemindersIncludes Everything From Hats With Logos to T-shirts, & MousepadsThird LargestCategory ofPromotionalSpendingNormally Have a Promotional Message Printed Somewhere