Visit Florida IMC Topic I Sales Promotions Peter Hayashida Lynn Maikke Marketing 642 Fall 2003

Outline Background Core Issues Findings Recommendations Critical Factors for Success Impact on Competition, Market and VF

Background What is Sales Promotion? Tools that stimulate increased frequency or quantity of purchase of a product or service among end-users and intermediates (the trade) Generally focused on short-term results Advertising presents the case, sales promotions provide immediate incentive to buy Can be used for: Acquisition: e.g., free samples Retention/increased usage: e.g., frequent flyer programs

Prevalence Sales promotions have become increasingly important within the marketing mix 10 years ago, 60:40 mix of advertising to sales promotions Today, 65 – 70% of budget is promotions Why? More accepted as an effective sales tool More product managers skilled in their use Greater pressure to increase current sales.

Types of Promotions Categorized by target audience: Consumer promotions (free samples, coupons, discounts, prizes, loyalty programs, tie-ins, and point-of-purchase displays) Trade promotions emphasize advertising, discounts, and display allowances Business and sales force promotions involve trade shows and conventions, specialty advertising, and contests for sales associates

Types of Promotions Categorized by type: Added-value promotions Give the consumer something in addition to the product Price Promotions Discounts, coupons, etc. PROHIBITED IN VISIT FLORIDA

VISIT FLORIDA Promotions Department In-house Works with local and international partners: media, retail outlets, and others Assembles tour packages that offer advertising exposure to partners Caveat: need to coordinate promotional message and themes with advertising

Findings In the absence of price promotions, must focus on added-value promotions Because of strength of ability to assemble packages, sweepstakes, prizes and giveaways have the most potential

Research Researchers Ward and Hill (1991) proposed factors that maximize return Differentiate games of chance from games of skill Differentiate games with immediate payoffs from those with delayed gratification Findings support games of chance (e.g., sweepstakes) where the payoff occurs at some point in the future Especially appropriate with a “big ticket” item like a vacation package

More Research Consumers decide to participate based on both intrinsic and extrinsic factors Perception of odds of winning and value of the prize(s) are critical to their decision More research later…

Recommendations VISIT FLORIDA should implement a sweepstakes program Prize is seven-day vacation package to one of several destinations in Florida (includes airfare and car rental) Winners selected at random Time cycle should be long – full duration of the VISIT FLORIDA campaign

Recommendations Individuals enter each time they visit the state for a weekend or longer Focus on leisure, not business traveler Participants initially complete a mail-in entry form with survey questionnaire Entrants will rank several FLA destinations Prizes allocated more closely to winners’ preferences Provides data regarding most popular destinations.

Recommendations Each time participants visit for a at least a weekend, they will receive an additional chance to win Allowing multiple entries from actual visitors matches rewards with desired behavior Favors most relevant population: frequent visitors

Critical Success Factors Design and implementation are key Extra care to not lead participants re: Value of prizes Odds of winning Be as clear as possible Emphasize the randomness of winner selection Extra caution for multiple prize packages Indirect relationship between time horizon and consumer disappointment All players receive a nominal token of value redeemable in Florida

Alternative Game Format Different types of games attract different types of consumers Scratch off game Game piece is also a coupon Allows for a high level of control with a limited number of tickets and a single winner Emphasize the randomness with a “Better Luck Next Time” message

Implications for Competitors, Markets, and VF Generic nature of sun-destinations The number of brands has increased Consumers more price-oriented Advertising efficiency has declined Rising costs, media clutter, and legal restraints Differentiate VF as a destination of diversity Emphasize art, culture, and other outdoor activities Sales promotions should supplement advertising with a consistent message and themes

Maximizing Results General objectives of sales promotion Attract new users Reward loyal customers (retention) Increase the repurchase rate of occasional users Attract brand switchers Most effective when the product is superior VISIT FLORIDA sales promotion objectives Induce consumers to visit the state for the 1 st time Promote greater consumer awareness Adapt programs to different consumer segments Converting brand switchers to loyal users depends on the consumers overall “experience”

Questions & Discussion