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16-1 Copyright 2012 McGraw-Hill Australia Pty Ltd PowerPoint Slides t/a Advertising and Promotion 2e by Belch, Belch, Kerr & Powell Chapter 16 Sales promotion.

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Presentation on theme: "16-1 Copyright 2012 McGraw-Hill Australia Pty Ltd PowerPoint Slides t/a Advertising and Promotion 2e by Belch, Belch, Kerr & Powell Chapter 16 Sales promotion."— Presentation transcript:

1 16-1 Copyright 2012 McGraw-Hill Australia Pty Ltd PowerPoint Slides t/a Advertising and Promotion 2e by Belch, Belch, Kerr & Powell Chapter 16 Sales promotion

2 16-2 Copyright 2012 McGraw-Hill Australia Pty Ltd PowerPoint Slides t/a Advertising and Promotion 2e by Belch, Belch, Kerr & Powell Learning objectives 1.To understand the role of sales promotion in a companys integrated marketing communication program and to examine why it is increasingly important. 2.To examine the various objectives of sales promotion programs. 3.To examine the types of consumer- and trade- oriented sales promotion tools and the factors to consider in using them. 4.To consider potential problems and abuse by companies in their use of sales promotion.

3 16-3 Copyright 2012 McGraw-Hill Australia Pty Ltd PowerPoint Slides t/a Advertising and Promotion 2e by Belch, Belch, Kerr & Powell Scope and role Objectives Consumer-oriented sales promotion Sales promotion abuse Trade-oriented sales promotion Growth of sales promotion Techniques Sales promotion Techniques Objectives

4 16-4 Copyright 2012 McGraw-Hill Australia Pty Ltd PowerPoint Slides t/a Advertising and Promotion 2e by Belch, Belch, Kerr & Powell Australias national dish

5 16-5 Copyright 2012 McGraw-Hill Australia Pty Ltd PowerPoint Slides t/a Advertising and Promotion 2e by Belch, Belch, Kerr & Powell Sales promotion An extra incentive to buy A tool to speed up sales Targeted to different parties A direct inducement that offers an extra value or incentive for the product to the sales force, distributors, or the ultimate consumer with the primary objective of creating an immediate sale.

6 16-6 Copyright 2012 McGraw-Hill Australia Pty Ltd PowerPoint Slides t/a Advertising and Promotion 2e by Belch, Belch, Kerr & Powell Scope of sales promotion Retailers Trade-oriented sales promotion Sales promotion can be targeted at… Consumers Consumer-oriented sales promotion

7 16-7 Copyright 2012 McGraw-Hill Australia Pty Ltd PowerPoint Slides t/a Advertising and Promotion 2e by Belch, Belch, Kerr & Powell Sales promotion vehicles Samples Coupons Premiums Contests/sweepstakes Refunds/rebates Bonus packs Price-off deals Loyalty programs Cooperative advertising Trade allowances Training programs Contests, dealer incentives Point-of-purchase displays Trade shows C onsumer-oriented Trade-oriented Event marketing

8 16-8 Copyright 2012 McGraw-Hill Australia Pty Ltd PowerPoint Slides t/a Advertising and Promotion 2e by Belch, Belch, Kerr & Powell Sony lives an innovative sales promotion

9 16-9 Copyright 2012 McGraw-Hill Australia Pty Ltd PowerPoint Slides t/a Advertising and Promotion 2e by Belch, Belch, Kerr & Powell Sales promotion for a tourist destination

10 16-10 Copyright 2012 McGraw-Hill Australia Pty Ltd PowerPoint Slides t/a Advertising and Promotion 2e by Belch, Belch, Kerr & Powell Scope and role Objectives Consumer-oriented sales promotion Sales promotion abuse Trade-oriented sales promotion Growth of sales promotion Techniques Sales promotion Techniques Objectives

11 16-11 Copyright 2012 McGraw-Hill Australia Pty Ltd PowerPoint Slides t/a Advertising and Promotion 2e by Belch, Belch, Kerr & Powell Sales promotion in Australia More than $6 billion is spent on promotions marketing annually. 81% of Australian consumers have purchased a product as a direct result of a promotion. Growth in sales promotion is expected as marketers become more adept at using viral marketing, and other opt-in communications technologies.

12 16-12 Copyright 2012 McGraw-Hill Australia Pty Ltd PowerPoint Slides t/a Advertising and Promotion 2e by Belch, Belch, Kerr & Powell Sales promotion within IMC Insert Figure 16.2 Development of promotional strategy

13 16-13 Copyright 2012 McGraw-Hill Australia Pty Ltd PowerPoint Slides t/a Advertising and Promotion 2e by Belch, Belch, Kerr & Powell Growth of sales promotion Brand proliferation Fragmentation of consumer markets Short-term focus of marketers Increased accountability Need to penetrate the clutter Increased promotional sensitivity Changing economic conditions Growing power of retailers Declining brand loyalty Some reasons for growth Some reasons for growth

14 16-14 Copyright 2012 McGraw-Hill Australia Pty Ltd PowerPoint Slides t/a Advertising and Promotion 2e by Belch, Belch, Kerr & Powell Sales promotionNZ Style

15 16-15 Copyright 2012 McGraw-Hill Australia Pty Ltd PowerPoint Slides t/a Advertising and Promotion 2e by Belch, Belch, Kerr & Powell The shifting role of the sales promotion agency

16 16-16 Copyright 2012 McGraw-Hill Australia Pty Ltd PowerPoint Slides t/a Advertising and Promotion 2e by Belch, Belch, Kerr & Powell Scope and role Objectives Consumer-oriented sales promotion Sales promotion abuse Trade-oriented sales promotion Growth of sales promotion Techniques Sales promotion Techniques Objectives

17 16-17 Copyright 2012 McGraw-Hill Australia Pty Ltd PowerPoint Slides t/a Advertising and Promotion 2e by Belch, Belch, Kerr & Powell Consumer-oriented sales promotion Target a specific market segment Obtain trial and repurchase Increase consumption Defend current customers Enhance IMC and build brand equity Identify target audiences Determine sales promotion objectives Set measurable goals

18 16-18 Copyright 2012 McGraw-Hill Australia Pty Ltd PowerPoint Slides t/a Advertising and Promotion 2e by Belch, Belch, Kerr & Powell Masterstrokes with MasterChef

19 16-19 Copyright 2012 McGraw-Hill Australia Pty Ltd PowerPoint Slides t/a Advertising and Promotion 2e by Belch, Belch, Kerr & Powell Schick uses sales promotion to encourage trial

20 16-20 Copyright 2012 McGraw-Hill Australia Pty Ltd PowerPoint Slides t/a Advertising and Promotion 2e by Belch, Belch, Kerr & Powell A new take on designer wear

21 16-21 Copyright 2012 McGraw-Hill Australia Pty Ltd PowerPoint Slides t/a Advertising and Promotion 2e by Belch, Belch, Kerr & Powell Packaged-goods manufacturers consumer promotions

22 16-22 Copyright 2012 McGraw-Hill Australia Pty Ltd PowerPoint Slides t/a Advertising and Promotion 2e by Belch, Belch, Kerr & Powell Sampling The products are of relatively low unit value, so samples do not cost much The products are divisible and can be broken into small sizes that can reflect the products features and benefits The purchase cycle is relatively short so the consumer can purchase in a relatively short time period Sampling works best when

23 16-23 Copyright 2012 McGraw-Hill Australia Pty Ltd PowerPoint Slides t/a Advertising and Promotion 2e by Belch, Belch, Kerr & Powell Sampling distribution Door-to-door Direct mail In-store sampling On-package sampling Event sampling With magazine/newspaper Internet Methods Other

24 16-24 Copyright 2012 McGraw-Hill Australia Pty Ltd PowerPoint Slides t/a Advertising and Promotion 2e by Belch, Belch, Kerr & Powell Bundle of baby products

25 16-25 Copyright 2012 McGraw-Hill Australia Pty Ltd PowerPoint Slides t/a Advertising and Promotion 2e by Belch, Belch, Kerr & Powell Coupons Used by virtually all packaged goods manufacturers The oldest and most widely used sales promotion tool

26 16-26 Copyright 2012 McGraw-Hill Australia Pty Ltd PowerPoint Slides t/a Advertising and Promotion 2e by Belch, Belch, Kerr & Powell Coupons (cont.)

27 16-27 Copyright 2012 McGraw-Hill Australia Pty Ltd PowerPoint Slides t/a Advertising and Promotion 2e by Belch, Belch, Kerr & Powell Advantages and limitations of coupons Advantages Disadvantages Appeal to price-sensitive consumer Can offer price break without retailers cooperation Can be effective way to induce trial of new or existing products Can be way to defend market share and encourage repurchase Coupons are often used by loyal consumers who may purchase anyway Misredemption and fraud Difficult to determine how many consumers will use coupons and when Declining redemption rates and high costs of couponing

28 16-28 Copyright 2012 McGraw-Hill Australia Pty Ltd PowerPoint Slides t/a Advertising and Promotion 2e by Belch, Belch, Kerr & Powell Premiums Free premiums: only require purchase of the product Self-liquidating premiums: require consumer to pay some or all of the cost of the premium Two types of premiums Premium: an offer of an item of merchandise or service either free or at a low cost that is an extra incentive for customers

29 16-29 Copyright 2012 McGraw-Hill Australia Pty Ltd PowerPoint Slides t/a Advertising and Promotion 2e by Belch, Belch, Kerr & Powell McDonalds Happy Meals

30 16-30 Copyright 2012 McGraw-Hill Australia Pty Ltd PowerPoint Slides t/a Advertising and Promotion 2e by Belch, Belch, Kerr & Powell Contest: a promotion where consumers compete for prizes or money on the basis of skills or ability. Winners are determined by judging entries or ascertaining which entry comes closest to some predetermined criteria. Sweepstakes/games: a promotion where winners are determined purely by chance and cannot require a proof of purchase as a condition for entry. Winners are chosen by random selection from a pool of entries or generation of a number to match those held by game entrants. Contests and sweepstakes

31 16-31 Copyright 2012 McGraw-Hill Australia Pty Ltd PowerPoint Slides t/a Advertising and Promotion 2e by Belch, Belch, Kerr & Powell Problems with contests and sweepstakes Do not contribute to brand building Focus not on brand Use by professionals or hobbyists Legal considerations Problems May generate negative publicity Effectiveness

32 16-32 Copyright 2012 McGraw-Hill Australia Pty Ltd PowerPoint Slides t/a Advertising and Promotion 2e by Belch, Belch, Kerr & Powell Strategies for improved return on promotions 1.Offer a popular grand prize. 2.Ensure that there is a good perceived chance of winning. 3.Give more than one prize. 4.Have intermittent prize draws. 5.Make it easy to participate. 6.Make it easy to understand. 7.Give instant gratification. 8.Give prizes of interest. 9. Communicate effectively. 10. Focus on the promotion, not the brand.

33 16-33 Copyright 2012 McGraw-Hill Australia Pty Ltd PowerPoint Slides t/a Advertising and Promotion 2e by Belch, Belch, Kerr & Powell Other popular consumer sales promotion tools Bonus packs Frequency/ loyalty programs Event marketing Price-off deals Refunds and rebates Other promotional tools

34 16-34 Copyright 2012 McGraw-Hill Australia Pty Ltd PowerPoint Slides t/a Advertising and Promotion 2e by Belch, Belch, Kerr & Powell Loyalty programs

35 16-35 Copyright 2012 McGraw-Hill Australia Pty Ltd PowerPoint Slides t/a Advertising and Promotion 2e by Belch, Belch, Kerr & Powell Event marketing Event marketing: promotion where a company or brand is linked to an event or where a themed activity is developed for the purpose of creating experiences for consumers and promoting a product or service. Event sponsorship: an IMC activity where a company develops actual sponsorship relations with a particular event and provides financial support in return for the right to display a brand name, logo or advertising message and be identified as a supporter of the event.

36 16-36 Copyright 2012 McGraw-Hill Australia Pty Ltd PowerPoint Slides t/a Advertising and Promotion 2e by Belch, Belch, Kerr & Powell Summary of consumer-oriented promotions and market objectives

37 16-37 Copyright 2012 McGraw-Hill Australia Pty Ltd PowerPoint Slides t/a Advertising and Promotion 2e by Belch, Belch, Kerr & Powell Scope and role Objectives Consumer-oriented sales promotion Sales promotion abuse Trade-oriented sales promotion Growth of sales promotion Techniques Sales promotion Techniques Objectives

38 16-38 Copyright 2012 McGraw-Hill Australia Pty Ltd PowerPoint Slides t/a Advertising and Promotion 2e by Belch, Belch, Kerr & Powell Trade-oriented sales promotion objectives Encourage retailers to display existing brands Obtain distribution of new products Maintain trade support for existing products Build retail inventories Objectives

39 16-39 Copyright 2012 McGraw-Hill Australia Pty Ltd PowerPoint Slides t/a Advertising and Promotion 2e by Belch, Belch, Kerr & Powell Types of trade-oriented promotions Trade shows Contests and incentives Trade allowances Point-of-purchase displays Sales training programs Cooperative advertising Buying Allowances Promotional Allowances Slotting Allowances Buying allowances Promotional allowances Slotting allowances

40 16-40 Copyright 2012 McGraw-Hill Australia Pty Ltd PowerPoint Slides t/a Advertising and Promotion 2e by Belch, Belch, Kerr & Powell Types of trade promotion

41 16-41 Copyright 2012 McGraw-Hill Australia Pty Ltd PowerPoint Slides t/a Advertising and Promotion 2e by Belch, Belch, Kerr & Powell Types of cooperative advertising Cooperative advertising Vertical cooperative advertising Ingredient- sponsored coop advertising Horizontal cooperative advertising

42 16-42 Copyright 2012 McGraw-Hill Australia Pty Ltd PowerPoint Slides t/a Advertising and Promotion 2e by Belch, Belch, Kerr & Powell The sales promotion trap

43 16-43 Copyright 2012 McGraw-Hill Australia Pty Ltd PowerPoint Slides t/a Advertising and Promotion 2e by Belch, Belch, Kerr & Powell Summary and conclusions Over the past two decades, marketers have been allocating increased share of promotional budget to sales promotion. Sales promotion techniques can be: consumer oriented trade oriented. Sales promotion techniques include sampling, coupons, premiums, competitions, rebates and refunds. Sales promotion abuse can occur when marketers become overly dependent on sales promotion techniques at the expense of building long-term brand position, brand equity and customer relationships.


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