1. Sales and Trade Promotions
Chapter Fifteen
Sales and Trade Promotions

2. Chapter Objectives
Discuss reasons for shift in marketing expenditures to promotions.
Identify various forms of sales promotions.
Identify types of coupons as well as distribution methods.
Explain the importance of in-store promotions.
Discuss the goals and the types of trade promotions.
Discuss the issue of slotting fees.

3. Sales Promotions
Reasons for recent shift from advertising to sales promotions are:
Immediate and dramatic impact on sales
Increased brand proliferation and brand parity
Greater consumer acceptance of promotions
Declining impact of advertising

4. Sales Promotions
Used to stimulate some type of activity on the part of a consumer or business
Most sales promotions are aimed at consumers, but sales promotions can also be targeted to businesses if the business is the final user of the product.
An office supply store may offer a business a special promotion to either make an immediate purchase or place a larger order. If the business purchases the office supplies for its own consumption, then the promotion is a sales promotion. If, however, they are reselling the office supplies, then it is a trade promotion.
Sales promotions need to fit into the IMC and should be part of the company’s strategic planning.

5. Types of Sales Promotions
Coupons
Premiums
Contests and sweepstakes
Bonus packs
Tie-ins
Frequency programs
Sampling
Price-offs
Refunds and rebates
Product placement
Brandchannel.com

6. Coupons Coupon Distribution
Instant redemption—can be instantly redeemed
Bounce-back—cannot be used immediately but must be used on the next shopping trip
Scanner-delivered—issued at the cash register
Cross-ruffing—placed on another product
Response-offer—issued upon customer request
E-coupons—issued electronically
Coupon Distribution

7. Premiums Offer free merchandise for purchasing the product
Not as effective in encouraging new customers
Need to be attractive to the customer
Overlay—the use of two or more promotions in a single offer

8. Contests and Sweepstakes
Allow participants an opportunity to win prizes
Contests require participants to make a purchase to be eligible to win.
In sweepstakes participants do not need to buy to be eligible.
The fun, fantasy, and stimulation aspects should be emphasized.
Effective for generating interest in a firm’s products
Example: Pepsi sweepstakes
Source: Courtesy of Pepsi-Cola Company.

9. Bonus Packs
Additional merchandise offered at the same price or slightly higher price
The goal is to entice consumers to switch brands or to encourage current consumers to stock up.
Should contain at least 25% of additional product to be effective

10. Tie-ins
Includes two or more goods or services within the same promotional offer
Intracompany—involve two or more distinct products within the same company
Intercompany—involve two different companies offering complementary products

11. Frequency Programs
Focus on developing brand loyalty and enhancing brand equity.
Should require multiple purchases over a period of time
There is a standardized redemption process.
There is a formal method for accumulating points.
Rewards come in the form of additional goods, discounts, or cash once enough points are accumulated.
Successful frequency program ties a customer to a firm, because it provides quality products and rewards them for their loyalty.

12. Sampling
Primarily used by food and beverage manufacturers, but can also be used by almost any firm
Although expensive, it is effective at generating trial purchase
To increase effectiveness, should be used with some other promotional offer

13. Price-offs Involve a reduction in the listed retail price of a product
Attract consumers and stimulate demand by reducing purchase risk.
If used too frequently, customers will expect the reduced price and won’t pay the full price.
Have almost instantaneous impact

14. Refunds and Rebates
Cash reimbursements paid to consumers with some type of proof of purchase
Refund—soft goods
Rebate—hard goods
Primary goal is to reward individuals for the purchase of a product.

15. Product Placement
Involves the placement of branded products in movies and television shows
Branded media—a movie or show that contains a brand name or logo with a storyline that intersects the brand’s advertising campaign.
Gets the branded product before the audience in a credible and seemingly non-commercial way

16. Example of supermarket in-store promotions.
Most of brand purchase decisions are made while in a retail store.
Packaging, point-of-purchase displays, and in-store promotions are critically important.
Packaging is the last opportunity to convince a shopper to purchase a brand.
Example of supermarket in-store promotions.

17. Trade Promotions
Incentives used by manufacturers and other members of the marketing channel to help push their products through the channel
Primary objective is to build relationships with other members of the channel and to encourage them to sell the firm’s products.
Goals of Trade Promotions
Stimulating initial distribution
Obtaining prime retail locations or shelf space
Supporting established brands
Countering competitive actions
Increasing order size
Building retail inventories
Reducing excess inventories of the manufacturer
Enhancing channel relationships
Enhancing the IMC program

18. Types of Trade Promotions
Trade allowances: financial incentive to motivate purchase
Off-invoice—financial discount on each case ordered.
Slotting fee—funds paid to retailers to stock new products.
Exit
Problems: Allowance pass-along, Forward buying, Diversion
Trade contests: Rewards for achieving a specific goal, e.g., spiff
Trade incentives: retailer performs function to receive an allowance, e.g., Cooperative Merchandising Agreement
Vendor support programs, e.g., Cooperative Program
Trade shows
Expenditures rank third in business-to-business market.
Offer the opportunity for buyers and sellers to interact.
Usually used to share information, compare merchandise, and develop contacts
The World Exposition (Expo) is one of the more popular and diverse tradeshows.