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Lecture 8 Promotional Strategies 4 Sales Promotion.

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1 Lecture 8 Promotional Strategies 4 Sales Promotion

2 Lecture Outline ISP/IPM Awards - Awards - Grand Prix Winners IPM - Awards - List of 2011 Winners International sales promotion Promotion across frontiers Planning a campaign Objectives Activities Developing a strategic approach Evaluation Regulation Application of sales promotion in different countries

3 International Sales Promotion “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” (The Promotion Marketing Association, PMA) (Moriarty, Mitchell & Wells, 2012, 546)

4 International Sales Promotion Blue Chip Marketing- Promotional Marketing Specialist Blue Chip Marketing- Promotional Marketing Specialist The use of sales promotions is increasing worldwide Support for advertising campaigns Cost and clutter of media Precise targeting Tracking of promotional effectiveness Standardisation is impossible Everyone loves a bargain/freebie!

5 Promotions Across Frontiers There are few truly global campaigns The importance of conveying consistency has never been higher The need to recognise variables: language, culture, legislation, logistics, the internet, and evaluation Promotional objectives are different – plc The greatest strength of promotional marketing is its flexibility and its ability to meet a client or company’s specific needs in a particular market

6 Promotions Across Frontiers What do you hope to gain? The two key benefits of running a promotion across different markets are consistency and cost- efficiency in brand and company image Also important are economies of scale in production and distribution, coupled with lower marketing and advertising costs

7 Promotions Across Frontiers What are the needs of our clients? Customer harmony exists across borders, and clients are therefore pushing agencies to deliver cross-border campaigns However, there is nothing but diversity when it comes to legislation covering promotion (Hanson, 2002)

8 Routes to Market The easiest route is via a well-known property or license e.g. Harry Potter, the Olympics Local culture and knowledge cannot be ignored In eastern Europe, consumers are still reluctant to give out personal details In Japan and India, stores may be too small for POP displays and sampling

9 Planning an International Campaign The stage of economic development is important There may be no legislative restriction, but sales promotion tools are not widely used You need to assess retail structures, mechanics such as coupons need good and honest trade support Avoid premiums in less developed markets

10 Planning an International Campaign Consideration needs to be paid to campaign packaging, manufacturing and shipping costs What data do you want to collect from the campaign? How are you going to collect it and how will you use that information to your advantage? (Hanson, 2002)

11 What can Sales Promotions Achieve? Sales promotions encourage the consumer to buy a specific brand, to buy more than one item, or buy a preferred brand and sample another Promotions can also build demand, build brand awareness, generate an impulse buy, motivate trial, and encourage multiple purchases (Gerwin, 2004)

12 The Task of Sales Promotion The main task of Sales Promotion is to encourage the target audience to behave in a particular way, often to buy a product Sales promotion offers buyers additional value, as an inducement to generate an immediate sale These inducements can be targeted at consumers, distributors, agents and members of the sales force ( Fill, 2009, p.538)

13 What can Sales Promotions Achieve? Sales promotions are more immediate than advertising, and offer consumers something tangible making it easier to evaluate Enhancements can be added to entice loyalty e.g. frequent flier programmes (Gerwin, 2004)

14 Figure 12.1 Factors affecting the increasing use of sales promotions in De Pelsmacker, Geuens & Van den Bergh, 2010, 408

15 Figure 12.2 Basic types of sales promotions, in De Pelsmacker et al, 2010, 409

16 Sales Promotion 3 MAIN CATEGORIES Customer promotions – premiums, gifts, prizes, competitions Trade promotions – special terms, POS materials Salesforce promotions – incentive and motivation schemes The 3 P’s – Price, Product, Prize (See Smith & Taylor, 2004, pp. 355-385)

17 Figure 12.3 Objectives and target groups of consumer promotions in De Pelsmacker et al, 2010, 410

18 Objectives CUSTOMER SALES PROMOTIONS Improve sales of existing products Encourage repeat purchase Encourage trial Counteract competitive marketing communications Increase product usage

19 Objectives CUSTOMER SALES PROMOTIONS Encourage brand loyalty Discourage brand switching Facilitate collection of database information Complement other marcoms “pull” activities

20 Objectives TRADE SALES PROMOTIONS Help introduce new product to the trade Encourage distribution penetration Increase allocation of shelf space Improve shelf display positioning Provide extra incentives over competing products

21 Objectives TRADE SALES PROMOTIONS Help stimulate sales force motivation Help overcome over-stocking problems or slow moving lines Complement other marcoms “push” activities

22 Table 12.1 Consumer promotion tools in De Pelsmacker et al., 2010, 412

23 Sales Promotion Activities Sampling Couponing Premiums Money-off Bonus packs Banded packs Competitions/prize draws Cause related sales promotions

24 Sales Promotion Activities Merchandising/POS/demonstrations Information leaflets/packs and catalogues Loyalty schemes Contests and incentives Allowances – discounts, additional free products, special terms Joint promotions

25 Table 12.3 Trade promotion tools in De Pelsmacker et al. 2010, 424

26 Matching Tools with Objectives Trial – sampling Retrial – coupon off next purchase Increase usage – collections, games, competitions Develop new uses – companion brand promotions, publications, workshops Increase shelf space – discount, extended credit, POS, advertising support Increase sales – competition, prize draw Goodwill – gifts, holidays, awards

27 Developing a Strategic Approach Identify what customers/prospects really want Identify the long term marketing and communications objectives Create guidelines for each product or service Determine how much of the total marketing and communications budget is available for sales promotions

28 Developing a Strategic Approach Ensure there is support and commitment from senior management so that sufficient management expertise and funds are available for promotions to be professionally carried out Develop a method of evaluation Plan and forecast the results

29 Evaluating Sales Promotions How good is the general idea? Will the sales promotion appeal to the target audience? Is the idea unique or is the competition doing something similar? Is the sales promotion presented clearly? How cost efficient and effective is the sales promotion?

30 Are Sales Promotions Effective? Source: De Pelsmacher et al., 2010

31 Sales Promotion in Hong Kong Most common promotional tools used in supermarkets: price discounts, in-store demonstrations, coupons, sweepstakes and games, and BOGOF Consumers respond most to price discounts, BOGOF and coupons BOGOF offers are more effective than coupons Sweepstakes and games are less effective as consumers realise that the chance of winning a substantial prize is slim (Shi, Cheung & Prendergast, 2005)

32 Sales Promotion in Hong Kong Price discounts, BOGOF offers, and coupons were found to be most effective for encouraging stockpiling, purchase acceleration and additional spending In-store demonstrations were found to be effective mainly in encouraging product trial Consumers prefer tools that are simple and need less involvement, while also being able to provide transaction utility

33 Sales Promotion in Other Countries Kelloggs used samples and demonstrations to enlighten customers about dry cereal and cold breakfasts in Asia To Launch Budweiser in Great Britain, posters, flags, pennants, T-shirts and sweatshirts were used Pfizer attracts wholesalers by sponsoring trips and other events (Onkvisit & Shaw, 2009, 525-526) In Brazil, gas delivery people are used to distribute product samples to households by Nestle, Johnson & Johnson and Unilever (Czinkota & Ronkainen, 2010, 587)

34 Sales Promotion by Global Marketers To fight counterfeiting in China, Disney asked participants to mail-in hologram stickers on genuine products to win prizes Mars invited consumers in 200 countries to vote whether a new M&M candy should be purple, aqua, or pink To launch Orbit gum in the US, “field research teams” distributed 7 million samples, dressed as characters from the ad campaign Guinness organised a competition in Asia to select a new bottle shape: options included bullhorn or guitar (Keegan & Green, 2011, 462)

35 Finally … Sales promotion is not restricted to the stimulation of demand at the consumer level. It may be used to gain middlemen’s support as well Sales promotion is effective when a product is first introduced to a market. It also works well with existing products that are highly competitive and standardised, especially when they are of low unit cost and have high turnover Sales promotion is needed to gain the “extra competitive advantage”

36 And … Some foreign retailers are reluctant to accept manufacturers’ coupons because they fear that they will not be reimbursed Consumers may review rebates, mail-in coupons, and money-back guarantees with suspicion, thinking that something must be wrong with the product (Onkvisit & Shaw, 2009, 525-526)

37 References Clow, K.E., & Baack, (2010) International Advertising, Promotion and Marketing Communications, 4e. Upper Saddle River, NJ: Pearson Prentice Hall Czinkota and Ronkainen (2010) Principles of International Marketing. 2e. Mason, OH: Cengage De Pelsmacker, P, Geuens, M & Van den Bergh, J, (2010) Marketing Communications, A European Perspective. 4e, Harlow: Pearson Education Fill, C., (2009) Marketing Communications, Interactivity, Communities and Content. 5e. Harlow: Pearson Education Gerwin, A.S. (2004) Sales Promotion Planning, Point of Purchase Advertising International. Retrieved March 15, 2011 from Hanson, M. (2002) Globalisation promotions across frontiers, Admap,, February, Issue 425

38 References Keegan, W.J. & Green, M.C., (2011) Global Marketing, 6e., Harlow: Pearson Education Moriarty, S., Mitchell, N., & Wells, W., (2012) Advertising and IMC, 9e. Upper Saddle River, NJ: Pearson Education Shi, Y., Cheung, K., & Prendergast, G. (2005) Behavioural Response to Sales Promotion Tools, A Hong Kong Study, International Journal of Advertising, Vol. 24, No. 4. Retrieved March 15, 2011 from Smith, P., and Taylor, J., (2004) Marketing Communications, An integrated approach. 4e. London: Kogan Page White, R. (2008) Sales promotion and the brand, Warc Best Practice, July. Retrieved March 15, 2011 from dda7cl-26f4-4 dda7cl-26f4-4 White, R. (2002) Sales promotion and the brand, Admap, Issue 430, Iuly. Retrieved March 15, 2011 from

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