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Promotional Mix Strategies Promotional Mix Strategies Push versus Pull and More.

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1 Promotional Mix Strategies Promotional Mix Strategies Push versus Pull and More

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4 How will they become aware of your promotion? How will they become aware of your promotion? Where will the incentive and the message be delivered? Where will the incentive and the message be delivered? When? In store vs. Sales call? Trade vs. Consumer? Best method of distribution? When? In store vs. Sales call? Trade vs. Consumer? Best method of distribution? FSI? Seminar? Direct Mail? Trade magazine? FSI? Seminar? Direct Mail? Trade magazine? Sales Call? Media? Home or store delivery? Sales Call? Media? Home or store delivery? On-Pack? In-Pack? Shelf pad? Handout? On-Pack? In-Pack? Shelf pad? Handout? Kiosk? Electronic on Cart? Co-Op/In Ad? Bounce back? Kiosk? Electronic on Cart? Co-Op/In Ad? Bounce back? Sales Promotion:

5 Objectives: New Product Introduction New Product Introduction Incremental Volume or Repeat Purchase Incremental Volume or Repeat Purchase Reinforce Brand Image Reinforce Brand Image Retail Support Retail Support Segment/target Audience Segment/target Audience Brand Switching Brand Switching In-store/Impulse Purchase In-store/Impulse Purchase Building Customer Database Building Customer Database Sales Promotion:

6 In 2005 marketers distributed more than $318 Billion in coupons worth $1083. per person in U.S. In 2005 marketers distributed more than $318 Billion in coupons worth $1083. per person in U.S. Sales Promotion:

7 Attention to consumers at or near the point of purchase -- in "the last mile" of decision-making, according to current jargon. Attention to consumers at or near the point of purchase -- in "the last mile" of decision-making, according to current jargon. OgilvyAction says most consumer decisions are made "near or in the store," and that the new shop "plans to reach consumers at key moments of truth." OgilvyAction says most consumer decisions are made "near or in the store," and that the new shop "plans to reach consumers at key moments of truth." MediaPost 1/8/2007 “Last Mile” and “Key Moments of Truth”

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11 Wall Street be damned, Hershey sticking by its theory that in-store marketing and promotion works better than advertising. Wall Street be damned, Hershey sticking by its theory that in-store marketing and promotion works better than advertising. Closer to the point of consumption Closer to the point of consumption Despite a slew of questions from analysts suggesting a link between decrease in ad spending and its lower-than-expected sales, Hershey President-CEO Rick Lenny was adamant that Hershey's increase in consumer marketing next year will happen "closest to the point of consumption." Despite a slew of questions from analysts suggesting a link between decrease in ad spending and its lower-than-expected sales, Hershey President-CEO Rick Lenny was adamant that Hershey's increase in consumer marketing next year will happen "closest to the point of consumption." Translation: in store. Translation: in store. AdAge: October 19, 2006 AdAge: October 19, 2006 Hershey Defends Its Marketing Strategy Despite Tough 3rd Quarter, Will Still Emphasize In-Store

12 Maximizing promotional effectiveness requires sales promotion planning: Maximizing promotional effectiveness requires sales promotion planning: to get the right offerto get the right offer to the right target or consumerto the right target or consumer at the right timeat the right time at the lowest costat the lowest cost At the right place – POP, magazine, newspaper, ROP, FSI, supplement, door hangers, mail, polybags, shelf dispenser / talker, electronic kiosk, on-pack, in-pack, in-store, on- cart, coupon, bounceback, internet, electronic checkoutAt the right place – POP, magazine, newspaper, ROP, FSI, supplement, door hangers, mail, polybags, shelf dispenser / talker, electronic kiosk, on-pack, in-pack, in-store, on- cart, coupon, bounceback, internet, electronic checkout With the right trade supportWith the right trade support Sales Promotion:

13 To gain trial among nonusers of a brand/service. To gain trial among nonusers of a brand/service. To increase repeat purchase and/or multiple purchases. To increase repeat purchase and/or multiple purchases. To expand brand usage by suggesting new uses. To expand brand usage by suggesting new uses. To defend share against competition. To defend share against competition. To support advertising campaign, theme, image. To support advertising campaign, theme, image. To increase distribution and/or dealer, retailer cooperation. To increase distribution and/or dealer, retailer cooperation. Short-term vs. long-term goals and relationships. Short-term vs. long-term goals and relationships. Sales Promotion:

14 Creating an immediate sale is the primary objective. Creating an immediate sale is the primary objective. Extra incentives to enhance movement and sales. Helps the selling process. Extra incentives to enhance movement and sales. Helps the selling process. Direct inducement that offers an extra value or incentive to sales force, distributors or the ultimate consumer. Direct inducement that offers an extra value or incentive to sales force, distributors or the ultimate consumer. Stimulates Dealer and Channel Involvement. Stimulates Dealer and Channel Involvement.

15 Sales Promotion: Increasingly, the gimmicks are going away. More scanning data. Increasingly, the gimmicks are going away. More scanning data. Step up to the challenge of real, brand building value, the kind that sparks genuine consumer and retailer interest. Step up to the challenge of real, brand building value, the kind that sparks genuine consumer and retailer interest. Contribute to marketing goals. Contribute to marketing goals. More Events and Product Licensing More Events and Product Licensing

16 Influences Push Strategy calls for using the sales force and trade promotion. Push Strategy calls for using the sales force and trade promotion. Pull Strategy calls for spending on advertising and sales promotion to build consumer demand. Pull Strategy calls for spending on advertising and sales promotion to build consumer demand.

17 Push Strategy: Persuade wholesalers and retailers to carry brands. Persuade wholesalers and retailers to carry brands. Give a brand shelf space. Give a brand shelf space. Promote a brand in coop advertising. Promote a brand in coop advertising. Producer WholesalerRetailerCustomer

18 Push Strategy: Be careful of those big displays at the end of the aisles. Be careful of those big displays at the end of the aisles. End Aisle Displays. End Caps. End Aisle Displays. End Caps. Look at the prices. Only about 40% is actually on sale. Look at the prices. Only about 40% is actually on sale. Because they are so bright, big and visual, we feel it’s on sale. Because they are so bright, big and visual, we feel it’s on sale. Producer WholesalerRetailerCustomer

19 Push Strategy: Upping the stakes on in-store marketing: U.S. marketers will spend $19.3 billion on point-of-purchase advertising. Upping the stakes on in-store marketing: U.S. marketers will spend $19.3 billion on point-of-purchase advertising. Using focus groups, sales data and econometric analysis to learn what works and what doesn't when it comes to in-store promotions. Using focus groups, sales data and econometric analysis to learn what works and what doesn't when it comes to in-store promotions. Wall Street Journal 3/21/06 Wall Street Journal 3/21/06Wall Street JournalWall Street Journal

20 Pull Strategy: Entice customers to try a new product. Entice customers to try a new product. Lure customers from competitive products. Lure customers from competitive products. Hold and reward loyal customers. Hold and reward loyal customers. ProducerWholesalerRetailerCustomer

21 Push Tools: Deals- Allowances, Price-offs and Discounts Deals- Allowances, Price-offs and Discounts Displays and Point of Purchase Displays and Point of Purchase Dealer Premiums Dealer Premiums Samples and Free Goods Samples and Free Goods Buy-Back Guarantees Buy-Back Guarantees Cooperative Advertising Cooperative Advertising Advertising Materials Advertising Materials Push Money (Spiffs) Push Money (Spiffs) Dealer Meetings and Contests Dealer Meetings and Contests Specialty Advertising Items Specialty Advertising Items

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23 Pull Tools: Sampling---in-store, events, newspaper, in-pack Sampling---in-store, events, newspaper, in-pack Cents Off Promotions and Coupons (-2%) Cents Off Promotions and Coupons (-2%) Continuity/Frequency and Loyalty Programs Continuity/Frequency and Loyalty Programs Premiums Premiums SLO (Self-Liquidating Offers/Premiums) SLO (Self-Liquidating Offers/Premiums) Point of Purchase Displays Point of Purchase Displays Contests, Games and Sweepstakes Contests, Games and Sweepstakes Rebates and Cash refunds Rebates and Cash refunds FSI’s (Free-Standing Inserts) 80% of distribution FSI’s (Free-Standing Inserts) 80% of distribution Advertising Specialty Items Advertising Specialty Items

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25 Continuity/Frequency and Loyalty Programs What happens to the loyalty when the loyalty program stops? What happens to the loyalty when the loyalty program stops? Loyalty cards in your wallet? Loyalty cards in your wallet? Represent an emotional tie to your brand? Represent an emotional tie to your brand? Likely they simply represent a discount coupon. Likely they simply represent a discount coupon. Loyalty is an elusive thing. It's not about saving money, or belonging to an exclusive group as much as it's about faith that a promise will be consistently delivered. Loyalty programs can measure behavior, but not necessarily create equity for a brand in the heart of the consumer. Loyalty is an elusive thing. It's not about saving money, or belonging to an exclusive group as much as it's about faith that a promise will be consistently delivered. Loyalty programs can measure behavior, but not necessarily create equity for a brand in the heart of the consumer.

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28 Hints and Comments: Coupons getting clipped. Growing retailer power and new accounting rules make couponing less attractive. Coupons getting clipped. Growing retailer power and new accounting rules make couponing less attractive Package-Goods Marketing Budgets 24%: Advertising 24%: Advertising 15%: Coupons and Customer Promotion 15%: Coupons and Customer Promotion +61%: Retail-Trade Promotion 100% 100% 1997: 23% Advertising (same) 1997: 23% Advertising (same) 24% Coupons/Cust. Promotion 24% Coupons/Cust. Promotion 53% Retail-Trade Promotion 53% Retail-Trade Promotion

29 Hints and Comments: 850 FSI’s (free standing inserts) per person in ’ FSI’s (free standing inserts) per person in ’ BILLION coupons. FSI’s are the vehicle in distributing the majority of coupons. Total pages increased 5.9 percent in ’ BILLION coupons. FSI’s are the vehicle in distributing the majority of coupons. Total pages increased 5.9 percent in ’05. Average coupon face values grew 6.7%, to $1.09. Average coupon face values grew 6.7%, to $1.09. Offer duration increased to 10.6 weeks. Offer duration increased to 10.6 weeks. Now more Household, and Heath & Beauty aids Now more Household, and Heath & Beauty aids

30 Hints and Comments: In 2005, the average face value of Free Standing Inserts (FSI’s) hit $1.03, in comparison to $.95 in 2003, representing an 8.1% increase. In 2004 face value reached $1.00 mark for the first time. In 2005, the average face value of Free Standing Inserts (FSI’s) hit $1.03, in comparison to $.95 in 2003, representing an 8.1% increase. In 2004 face value reached $1.00 mark for the first time. We are seeing more manufacturers present greater incentives to shoppers, whether on a face value or per-unit basis. We are seeing more manufacturers present greater incentives to shoppers, whether on a face value or per-unit basis. “Marketers continue to validate that FSI’s are a great tool to build awareness and gain trial.” Marx Promotion Intelligence ‘04 FSI Trends “Marketers continue to validate that FSI’s are a great tool to build awareness and gain trial.” Marx Promotion Intelligence ‘04 FSI Trends

31 Hints and Comments: In-ad coupons accounted for 8.5% of all coupons distributed. In-ad coupons accounted for 8.5% of all coupons distributed. Average expiration date was three months. FSI’s were 2.6 months Average expiration date was three months. FSI’s were 2.6 months The average redemption rate for in-ad coupons was 0.09% in The average redemption rate for in-ad coupons was 0.09% in 2004.

32 Hints and Comments: Coupons can be delivered with a full page of advertising. i.e., Restaurants Coupons can be delivered with a full page of advertising. i.e., Restaurants Coupons on new items but also on products that have plateaued. To keep prices low and keep products on shelf. Coupons on new items but also on products that have plateaued. To keep prices low and keep products on shelf. $30 savings for a diabetic testing kit or 25 cents off flour. $30 savings for a diabetic testing kit or 25 cents off flour. Demographics: 43% men; 32% live with income of $40-75K. Demographics: 43% men; 32% live with income of $40-75K.

33 Hints and Comments: Coupon experts inspire more use. Coupon savvy shoppers are advising other consumers to learn sale cycles and buy items on sale to save the most money. Although coupon fraud exists, manufacturers offer coupons to entice trying a new product or switch brands. Coupon experts inspire more use. Coupon savvy shoppers are advising other consumers to learn sale cycles and buy items on sale to save the most money. Although coupon fraud exists, manufacturers offer coupons to entice trying a new product or switch brands. Big increases: Vitamins, Rug and Room Deodorizers; Prepared and Frozen Foods; Hair Care; Cereals. Decreases in Household cleaning products. Big increases: Vitamins, Rug and Room Deodorizers; Prepared and Frozen Foods; Hair Care; Cereals. Decreases in Household cleaning products.

34 Hints and Comments: Walgreens and 15 top package- goods marketers are rolling out a RFID (Radio Frequency IDentification) system to electronically track when, how long, and where promotional displays are placed in the chain’s 5,000+ stores. 1/06 Walgreens and 15 top package- goods marketers are rolling out a RFID (Radio Frequency IDentification) system to electronically track when, how long, and where promotional displays are placed in the chain’s 5,000+ stores. 1/06

35 Hints and Comments: Growing importance of shopper marketing Growing importance of shopper marketing Tilts balance of power even more toward retailers, being the distribution channel. Tilts balance of power even more toward retailers, being the distribution channel. Own fastest-growing advertising medium for their suppliers too. Own fastest-growing advertising medium for their suppliers too.

36 Hints and Comments: Slotting Allowances: The fees retailers collect from manufacturers to ensure shelf space for new products make the marketplace more efficient, a Yale/Cornell study found. Slotting Allowances: The fees retailers collect from manufacturers to ensure shelf space for new products make the marketplace more efficient, a Yale/Cornell study found. "We find that when retailers perceive that a product is likely to be a sure hit, they don't seem to ask for slotting allowances... manufacturers don't offer slotting allowances when they perceive the product to be a sure dud.” "We find that when retailers perceive that a product is likely to be a sure hit, they don't seem to ask for slotting allowances... manufacturers don't offer slotting allowances when they perceive the product to be a sure dud.” Progressive Grocer (4/05) Progressive Grocer (4/05)Progressive GrocerProgressive Grocer

37 Hints and Comments: Ever wonder why so much stuff on the Internet is free? Ever wonder why so much stuff on the Internet is free? How do sites make money by giving away their products? How do sites make money by giving away their products? Traditional Gillette "give away the razors, sell the blades" model. Traditional Gillette "give away the razors, sell the blades" model. In the online age, these tried-and- true giveaway strategies are taken far beyond simply exchanging cash for services and goods. In the online age, these tried-and- true giveaway strategies are taken far beyond simply exchanging cash for services and goods. Wired 4/08

38 Questions: Are distributing drug samples to doctors a push or a pull strategy? Are distributing drug samples to doctors a push or a pull strategy? Incentives from HBO to hotels and motels. Push or Pull? Incentives from HBO to hotels and motels. Push or Pull? Beer.com produced 50K bottle caps featuring its name and left them on bars during spring and winter breaks. Push or Pull? Beer.com produced 50K bottle caps featuring its name and left them on bars during spring and winter breaks. Push or Pull?

39 Question: Wal-Mart TV network (in store) 42” plasma screens 42” plasma screens A smart buy or a goodwill, defensive gesture? A smart buy or a goodwill, defensive gesture? Sets are silent. Sets are silent. In-store advertising system. In-store advertising system. In fall ’06, $247K, 129 million impressions and CPM: $2.28 includes three :30’s, and five :10’s, every two hours. In fall ’06, $247K, 129 million impressions and CPM: $2.28 includes three :30’s, and five :10’s, every two hours. AdvAge 9/06 AdvAge 9/06

40 Hints and Comments: Wal-Mart Touts In-Store TV Wal-Mart Touts In-Store TV Research claims advertising on its in-store marketing network, with Premier Retail Networks, is more efficient than Cable and Network TV advertising in generating sales. A survey of TV watchers conducted by the TNS Media & Entertainment Group found that 15% of viewers purchased advertised products immediately after seeing them on an in-store broadcast. Research claims advertising on its in-store marketing network, with Premier Retail Networks, is more efficient than Cable and Network TV advertising in generating sales. A survey of TV watchers conducted by the TNS Media & Entertainment Group found that 15% of viewers purchased advertised products immediately after seeing them on an in-store broadcast. MediaPost Communications 11/30/05 MediaPost Communications 11/30/05MediaPost CommunicationsMediaPost Communications

41 Hints and Comments: Affecting more markets. Ford dealer cuts will go deeper. Falling market share will mean more than 18 metro markets are targeted. Ford Motor company to consolidate dealerships. Smaller market share means fewer dealers. Lower costs. WSJ 10/23/2006 Affecting more markets. Ford dealer cuts will go deeper. Falling market share will mean more than 18 metro markets are targeted. Ford Motor company to consolidate dealerships. Smaller market share means fewer dealers. Lower costs. WSJ 10/23/2006

42 Sales promotion budgets are usually divided into three categories: Sales promotion budgets are usually divided into three categories: 1. Consumer advertising 2. Consumer promotion 3. Trade promotion Companies in same industry can put emphasis on Push or Pull. Companies in same industry can put emphasis on Push or Pull. Summary:

43 Push strategy is appropriate with low brand awareness in a category and brand choice is made in store. Can be an impulse purchase and product benefits are understood. Push strategy is appropriate with low brand awareness in a category and brand choice is made in store. Can be an impulse purchase and product benefits are understood. Pull strategy works best with high brand awareness and loyalty, or high involvement in category and customers look for product differences. Pull strategy works best with high brand awareness and loyalty, or high involvement in category and customers look for product differences. Summary:

44 "Consumers are more participative and selective and the trend from push to pull is accelerating." A.G. Lafley, Procter & Gamble CEO, keynote speaker at the Association of National Advertisers (ANA) ‘06. A.G. Lafley, Procter & Gamble CEO, keynote speaker at the Association of National Advertisers (ANA) ‘06. Summary:

45 Product Categories: Different Input For Beverages Dry Grocery Frozen Packaged Deli Apparel Entertainment General Merchandise Household Personal Care Summary:

46 Promotional Mix Strategies Push versus Pull and More

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