16 Sales Promotion

Sales Promotion A direct inducement that offers an extra value or incentive for the product to the sales force, distributors, or ultimate consumer with the primary objective of creating an immediate sale 16-2

Sales Promotion Vehicles Consumer-Oriented Trade-Oriented Samples Contests, incentives Coupons Trade allowances Premiums POP displays Contests/sweepstakes Sales training programs Refunds/rebates Trade shows Bonus Packs Cooperative advertising Price-off deals Frequency programs Event marketing 16-3

Reasons for Sales Promotion Increases Growing power of retailers Declining brand loyalty Increased promotional sensitivity Brand proliferation Fragmented consumer markets Short-term focus of marketers Increased accountability Competition Clutter 16-4

Sale Promotion Concerns Negative impact of sales promotions Fewer dollars to build brand equity Encourages consumers to purchase on the basis of price Detracts from the value of the brand 16-5

Objectives of Consumer-Oriented Promotions Increase consumption of an established brand Obtain trial and purchase Defend (maintain) current customers Enhance IMC efforts and build brand equity Target a specific segment 16-6

Sampling Works Best When The products are of relatively low unit value The product can be broken into a small piece or size that reflects the full features and benefits The purchase cycle is relatively short 16-7

Pros and Cons of Coupons Advantages Disadvantages Appeals to price sensitive consumers Hard to tell how many consumers will use them and when Can offer discounts without retailer cooperation Often used by loyal consumers who would purchase anyway Effective way to induce trial of products Low redemption rates and high costs Defends market share and encourages repurchase Misredemption and fraud 16-8

Types of Coupons In/On-Pack In-Store Bounce-back Tear-off pads Cross-ruff Handouts Instant Dispensers Register printout 16-9

Premiums An offer of an item, merchandise, or service, free or at a low cost, that is an extra incentive for customers Types of Premiums Free: Only requires purchase of the product Self-liquidating: consumer required to pay some or all of the cost of the premium 16-10

More Consumer-Oriented Promotions Price-off Deals Contests and sweepstakes Refunds and rebates Bonus packs Loyalty programs Event marketing 16-11

Trade Oriented Promotions Obtain distribution for new products Objectives Maintain support for established brands Encourage display of products Build retail inventories 16-12

Types of Trade Oriented Promotions Contests and incentives Trade allowances Co-op Advertising Types POP displays Sales training Trade shows Buying Promotional Slotting 16-13

Cooperative Advertising Trade-oriented cooperative advertising The cost of advertising is shared by more than one party Forms Horizontal Ingredient-sponsored Vertical 16-14

The Sales Promotion Trap 16-15