1. Sales Promotion…
Is an incentive to get customers, channel members, or the sales force to take some action (like buying)
Has 2 basic types
Price reduction effect (e.g. rebates, coupons)
Incentive based on something other than price (e.g. a contest)
Clow and Baack -- 2 basic types
Franchise Building
Sales Building
Always conveys one or more messages, intended or unintended

2. Purposes of Trade Oriented Sales Promotion
New product distribution
Maintain trade support and market share for established products
Get shelf space
Get display and other kinds of promotional support
Build channel inventories
Build order size
Build channel relationships

3. Trade Promotion Tools Trade allowances – incentive for purchasing
Trade contests
Trade incentives – incentive for performing a function
Training programs
Vendor support programs – reimbursement to channel members e.g. for advertising
Trade shows
Specialty advertising
Point of purchase advertising – special merchandise displays

4. Drawbacks and Disadvantages of Trade Promotions
Costs
Impact on small manufacturers
Over-reliance to move merchandise
Erosion of brand image
Specific to Trade Allowances
Failing to pass along savings to consumers
Forward buying
Diversion

5. Good Times or Reasons to use Sales Promotion
When price promotion is consistent with brand image or positioning
When introducing a new product
When trying to move inventory, or trying to get the most out of a bad idea (e.g. a clothing line that didn’t work out)
In maturity – competing on price
But be careful what message is conveyed

6. Sales Promotion is good for…
Getting attention
Getting liking (maybe)
Getting cognitive involvement (contests & sweepstakes)
Getting trial
Getting purchase
But again, be careful what message is conveyed

7. Types Coupons Premiums Contests & sweepstakes Refunds & rebates
Sampling
Bonus packs
Price-offs
Combinations of the above

8. Coupons FSIs – most common
Avg. redemption rate – about 2%, but >20% for Internet coupons
Brand-loyal customers redeem about 80% of coupons: both bad and good
Illegal redemption
Use couponing to reinforce brand already in evoked set

9. Other Types, some detail
Premiums
Use premiums with perceived value
Premium should relate to the product or at least to the audience
Problems: time and cost
Contests and Sweepstakes
More engaging – but tie to decision process and hierarchy of effects
Use both extrinsic and intrinsic value
Problems: cost, indifference, clutter

10. More types and detail Refunds and rebates Sampling
Problems: costs, expectations, time-to-reinforcement
Sampling
Introduce a new product
Problems: costs, effective distribution

11. Even more types and detail
Bonus Packs
Can get brand switching
Tough to figure right amount of give away
Price-offs
Message?
Business-to-business
Few FSIs
More emphasis on premiums, contests/sweepstakes, sampling, and bonus packs

12. Key Aspects of Sales Promotion to Keep in Mind
It’s an extra incentive
It’s a sales accelerator, often
Often the channel is the target
It can be consumer oriented, trade oriented, or aimed at business customers

13. Use of Sales Promotion has grown due to…
Power of retailers
Lower brand loyalty
More sensitivity to promotion
More brands
Fragmented consumer market
Short term view
More accountability
Competition
Clutter in advertising