1. The McGraw-Hill Companies, Inc., 1998
Chapter 15
Sales Promotion
Irwin/McGraw-Hill
The McGraw-Hill Companies, Inc., 1998 1 1

2. Consumer-Oriented Promotions
Samples
Coupons
Premiums
Contests/sweepstakes
Refunds/rebates
Bonus packs
Price-Discount
Event sponsorship
Sampling - sampling involves a variety of procedures whereby consumers are given some quantity of a product for no charge to induce trial. Sampling is often used as a way of introducing a new brand to the market although it is also used for established products.
Couponing is the oldest, yet most widely used and effective sales promotions tool. As shown in the text, the number of coupons distributed to consumers has increased dramatically over the past decade and more than 7 billion are redeemed each year in the U.S.
A premium is an offer of an extra item of merchandise or service either free or at a low price that is used as an incentive for purchase. The two basic types of premiums are:
A contest is a promotion whereby consumers compete for prizes or money on the basis of skills or ability and winners are determined by judging entries against some predetermined criteria. Contests often provide a purchase incentive by requiring a proof of purchase to enter or to obtain an entry form from a dealer or advertisement. A sweepstakes is a promotion whereby winners are determined purely by chance and cannot require a proof of purchase as a condition for entry. Another form of a sweepstakes is a game which also has a chance element associated with winning.
Refunds and Rebates are offers to return some portion of the product purchase price after supplying some sort of proof or purchase. Consumers are generally responsive to refund or rebate offers, particularly as the size of the savings offer increases.
Bonus Packs offer the consumer an extra amount of a product at the regular price by providing larger containers or extra units. Here are some of the advantages and limitations of bonus packs:
Price-off Deals provide a reduction in the regular price of the brand, typically right on the package through specially marked price packs. Here are some of the advantages and limitations of price-off promotions:
Event Sponsorship are promotions whereby a company develops sponsorship relations with a particular event. Sponsorship of sporting events such as golf and tennis tournaments and car races are common among and many companies are sponsoring concert tours. Marketers are attracted to event sponsorship for many reasons including:
Irwin/McGraw-Hill
The McGraw-Hill Companies, Inc., 1998
Slide 15-1 2 2

3. Objectives of Consumer-Oriented Sales Promotion
Marketers sales promotion objectives for targeting consumers market.
Obtaining trial and repurchase
Increasing consumption of an established brand
Defending current customers
Targeting a specific market
Enhancing advertising and marketing efforts
Objectives for consumer-oriented sales promotion - As the use of sales promotion techniques continues to increase, companies must give consideration to what they hope to accomplish through their promotions and set clearly defined objectives and measurable goals for their sales promotional programs. While the basic goal of most sales promotion activities is to induce purchase of a brand, there are a number of different objectives the marketer might have for both new and established brands. These include:
Irwin/McGraw-Hill
The McGraw-Hill Companies, Inc., 1998
Slide 15-2 3 3

4. The McGraw-Hill Companies, Inc., 1998
Advantages of Coupons
Offers price reduction only to consumers who are price sensitive
Does not rely on retailers’ cooperation
Generates trial of a new brand
Encourages non-users to try an established brand or users to repeat use
Advantages of coupons:
Coupons make it possible to offer a price reduction to those consumers who are price sensitive without having to reduce the price for everyone.
Coupons allow the offering of a price reduction without having to rely on retailers.
Couponing can be an effective promotional device for generating trial of a new brand.
Coupons can be used to encourage trial and increase consumption of established brands.
Irwin/McGraw-Hill
The McGraw-Hill Companies, Inc., 1998
Slide 15-3 4 4

5. Disadvantages of Coupons
Difficult to estimate repurchase rates
Expensive
Cons:
It can be difficult to estimate how many consumers will redeem a coupon and when they will do so.
Coupons targeted to attract new users of established brands are often redeemed by previous loyal users.
Couponing programs can be expensive.
Problems of coupon misredemption and fraud exist.
Irwin/McGraw-Hill
The McGraw-Hill Companies, Inc., 1998
Slide 15-4 5 5

6. Advantages of Sweepstakes and Contests
Effective way of getting the consumer to become involved with the brand by making the promotion product relevant
Generate interest in or excitement over a brand and attracting attention to advertising
Effective way of dealing with specific marketing problems
Irwin/McGraw-Hill
The McGraw-Hill Companies, Inc., 1998
Slide 15-5 6 6

7. Disadvantages of Contests and Sweepstakes
May overshadow the ad or brand
May detract from brand franchise or image
Legal problems and administration
Presence of professionals or hobbyists who may submit entries and detract from effectiveness
Irwin/McGraw-Hill
The McGraw-Hill Companies, Inc., 1998
Slide 15-6 7 7

8. Breakdown of Spending on Event Sponsorship
Event Sponsorship - Event sponsorships are promotions whereby a company develops sponsorship relations with a particular event. Sponsorship of sporting events such as golf and tennis tournaments and car races are common among and many companies are sponsoring concert tours. Marketers are attracted to event sponsorship for many reasons including:
The opportunity to get the company and/or product name in front of the consumer, particularly those in the target market.
A promotional opportunity for companies that may be banned from other media (e.g., tobacco companies).
Opportunities for integrated marketing communications an promotional tie-ins, both on a national and regional level.
Entertaining key customers and clients and develop favorable relationships.
It should be noted that the value of event sponsorships can be difficult to document and some experts question the return received by marketers who invest in them.
The McGraw-Hill Companies, Inc., 1998
Slide 15-7
Figure 15-7
Irwin/McGraw-Hill 8 8

9. Trade-Oriented Sales Promotion
Dealer incentives
Trade allowances
Point-of-purchase displays
Training programs
Trade shows
Cooperative advertising
Irwin/McGraw-Hill
The McGraw-Hill Companies, Inc., 1998
Slide 15-8 9 9

10. Objectives of Trade-Oriented Sales Promotions
Obtain distribution for new products
Maintain trade support for established brands
Encourage retailers to display established brands
Build retail inventories
Irwin/McGraw-Hill
The McGraw-Hill Companies, Inc., 1998
Slide 15-9 10 10