Copyright © 2012 Pearson Canada Inc. CHAPTER 13 Sales Promotion 13-1

Copyright © 2012 Pearson Canada Inc. Learning Objectives Identify the roles of various consumer and trade promotion activities in the marketing communications process Outline the nature of various consumer and trade promotion activities Assess the strategies for integrating sales promotions into the marketing communications mix 13-2

Copyright © 2012 Pearson Canada Inc. Sales Promotion Activity that provides special incentives to bring about immediate response from: Consumers, Distributors, Organizations sales force. 13-3

Copyright © 2012 Pearson Canada Inc. Sales Promotion Can be subdivided into two main categories: Consumer promotions stimulate consumer purchases (through coupons, contests and other frequent-buyer programs). Help pull the product through the distribution channel Trade Promotions Encourage distributors to purchase more volume and provide additional merchandise support to stimulate consumer purchase. Help push the product through the distribution channels 13-4

Copyright © 2012 Pearson Canada Inc. Sales Promotion Planning Today, Sales Promotions are not viewed as separate entities from advertising Sales Promotions are planned at the same time to ensure synergies are achieved across all forms of communications. 13-5

Copyright © 2012 Pearson Canada Inc. Sales Promotion Objectives Promotion activity must complement the total marketing effort Should be realistically achievable, measurable, highly focused, and capable of being evaluated and modified. 13-6

Copyright © 2012 Pearson Canada Inc. Pull and Push Promotion Strategies Pull: the organization creates demand by directing promotional efforts at consumers or final users of a product. Push: the organization creates product demand by directing promotional efforts at intermediaries, who in turn promote the product to consumers. Marketer Consumer Wholesaler Retailer Pull Push 13-7

Copyright © 2012 Pearson Canada Inc. Consumer Promotion Planning Pull Strategy pulls the product through the channel Marketer Distributors Consumers Objectives: Trial purchase Brand loyalty Multiple purchase 13-8

Copyright © 2012 Pearson Canada Inc. Types of Consumer Promotion Activity Coupons Free Samples Contests Cash Refunds Premium Offers Loyalty (Frequent-Buyer) Programs Delayed Payment Incentives Combination Offers 13-9

Copyright © 2012 Pearson Canada Inc. Objectives of Coupon Programs Non-brand users to make trail purchase Maintain current users Speed up acceptance of a new product Encourage current customers to repurchase the brand (build loyalty) Attract users of competitive brands Encourage multiple purchases Increase seasonal sales 13-11

Copyright © 2012 Pearson Canada Inc. Methods of Coupon Distribution Coupons can be delivered to consumers in four different ways, by: Media Product In-Store Digitally 13-12

Copyright © 2012 Pearson Canada Inc. Free Samples Free product distributed to potential users, effective for encouraging trial purchase. In-store samples (most common) Cross-sampling Co-operative direct mail Event sampling Sample packs Experiential (also called On-Site) 13-13

Copyright © 2012 Pearson Canada Inc. Contests Contests are designed and implemented to create temporary excitement about a product. Sweepstakes Games / Instant Wins Successful contests have significant media advertising support

Copyright © 2012 Pearson Canada Inc. Cash Refunds (Rebates) Money returned directly to the consumer by the manufacturer after the purchase has been made. Reinforce loyalty and multiple purchases Slippage commonly occurs Successful refund offers require strong P-O-P support 13-15

Copyright © 2012 Pearson Canada Inc. Premium Offers An item offered free or at a bargain price to encourage consumers to buy a specific product. It is usually offered three ways. Mail-in In/On Pack Coupon Offer at P-O-P 13-16

Copyright © 2012 Pearson Canada Inc. Loyalty (Frequent-Buyer) Programs A frequent buyer program offers consumers a bonus, such as points or play money. Canadian Tire Money Frequent flyer programs Aeroplan / Airmiles Safeways Club Card Encourage loyalty through repeat purchases Generate data on purchase patterns, combinations Allow for price promotion without undermining list price 13-17

Copyright © 2012 Pearson Canada Inc. Delayed Payment Incentives Consumers are granted a grace period during which no interest or principal are paid for the item purchased. Leons Dont Pay a Cent Event Home Depot: offers six-month and one-year interest-free financing on renovations and home repairs. offers financing; By contrast independent contractors demand payment when jobs are completed

Copyright © 2012 Pearson Canada Inc. Trade Promotion – Push Strategy Pushes the product through the channel Consumers Marketer Distributors Objectives: Secure listings Build sales volume Secure merchandising support 13-19

Copyright © 2012 Pearson Canada Inc. Trade Promotion Activity Three basic objectives: secure a listing, build volume, and encourage merchandise support. Trade Allowance Performance Allowance Co-operative Advertising Allowance Continued… 13-20

Copyright © 2012 Pearson Canada Inc. Trade Promotion Planning (cont.) Retail In-Ad Coupons Dealer Premiums Collateral Material Dealer Display Material (P-O-P) Trade Shows Branded Promotion Merchandise 13-21

Copyright © 2012 Pearson Canada Inc. Sales Promotion and Media Strategy A media mix is usually needed to achieve the communications goals of a promotion plan The budget is spent in a concentrated period to generate high levels of awareness for the promotion. Print Media Broadcast Media Online Media 13-22

Copyright © 2012 Pearson Canada Inc. Sales Promotion Integration with Marketing Communications Promotion strategies must be integrated with other marketing communications strategies. Strategic decisions must consider: Frequency of Promotion Activity Brand Image and promotions Building brand equity 13-23