16-1 Copyright 2012 McGraw-Hill Australia Pty Ltd PowerPoint Slides t/a Advertising and Promotion 2e by Belch, Belch, Kerr & Powell Chapter 16 Sales promotion.

16-1Copyright 2012 McGraw-Hill Australia Pty Ltd PowerPoint Slides t/a Advertising and Promotion 2e by Belch, Belch, Kerr & Powell

Chapter 16

Sales promotion


Learning objectives

1. To understand the role of sales promotion in a company’s integrated marketing communication program and to examine why it is increasingly important.

2. To examine the various objectives of sales promotion programs.

3. To examine the types of consumer- and trade-oriented sales promotion tools and the factors to consider in using them.

4. To consider potential problems and abuse by companies in their use of sales promotion.


Scope and role

Objectives

Consumer-oriented sales promotion

Sales promotion abuse

Trade-oriented sales promotion

Growth of sales promotion

Techniques

Sales promotion

TechniquesObjectives


Australia’s national dish


Sales promotion

An extra incentive to buy

An extra incentive to buy

A tool to speed up sales

A tool to speed up sales

Targeted to different parties

Targeted to different parties

A direct inducement that offers an extra value or incentive for the product to the sales force, distributors, or the ultimate consumer with the primary objective of creating an immediate sale.

A direct inducement that offers an extra value or incentive for the product to the sales force, distributors, or the ultimate consumer with the primary objective of creating an immediate sale.


Scope of sales promotion

RetailersRetailers

Trade-oriented sales promotionTrade-oriented sales promotion

Sales promotion can be targeted at…Sales promotion can be targeted at…

ConsumersConsumers

Consumer-oriented sales promotionConsumer-oriented sales promotion


Sales promotion vehicles

SamplesSamples

CouponsCoupons

PremiumsPremiums

Contests/sweepstakesContests/sweepstakes

Refunds/rebatesRefunds/rebates

Bonus packsBonus packs

Price-off dealsPrice-off deals

Loyalty programsLoyalty programsCooperative advertisingCooperative advertising

Trade allowancesTrade allowances

Training programsTraining programs

Contests, dealer incentivesContests, dealer incentives

Point-of-purchase displaysPoint-of-purchase displays

Trade showsTrade shows

CConsumer-orientedonsumer-oriented Trade-orientedTrade-oriented

Event marketingEvent marketing


Sony lives an innovative sales promotion


Sales promotion for a tourist destination


Scope and role

Objectives





Techniques

Sales promotion



Sales promotion in Australia

More than $6 billion is spent on promotions marketing annually.More than $6 billion is spent on promotions marketing annually.

81% of Australian consumers have purchased a product as a

direct result of a promotion.

81% of Australian consumers have purchased a product as a

direct result of a promotion.

Growth in sales promotion is expected as marketers become more adept at using viral marketing, email and other opt-in communications technologies.

Growth in sales promotion is expected as marketers become more adept at using viral marketing, email and other opt-in communications technologies.


Sales promotion within IMC

• Insert Figure 16.2• Development of promotional strategy



Brand proliferationBrand proliferation

Fragmentation of consumer marketsFragmentation of consumer markets

Short-term focus of marketersShort-term focus of marketers

Increased accountabilityIncreased accountability

Need to penetrate the clutterNeed to penetrate the clutter

Increased promotional sensitivityIncreased promotional sensitivity

Changing economic conditionsChanging economic conditions

Growing power of retailersGrowing power of retailers

Declining brand loyaltyDeclining brand loyaltySome

reasonsfor

growth

Some reasons

for growth


Sales promotion—NZ Style


The shifting role of the sales promotion agency


Scope and role

Objectives





Techniques

Sales promotion




Target a specific market segmentTarget a specific market segment

Obtain trial and repurchaseObtain trial and repurchase

Increase consumption Increase consumption

Defend current customers Defend current customers

Enhance IMC and build brand equityEnhance IMC and build brand equity

Identify target audiencesIdentify target audiences

Determine sales promotion objectivesDetermine sales promotion objectives

Set measurable goalsSet measurable goals


Masterstrokes with MasterChef


Schick uses sales promotion to encourage trial


A new take on designer wear


Packaged-goods manufacturers’ consumer promotions


Sampling

The products are of relatively low unit value, so

samples do not cost much

The products are of relatively low unit value, so

samples do not cost much

The products are divisible and can be broken into small sizes that can reflect the

product’s features and benefits

The products are divisible and can be broken into small sizes that can reflect the

product’s features and benefits

The purchase cycle is relatively

short so the consumer can purchase in a relatively short

time period

The purchase cycle is relatively

short so the consumer can purchase in a relatively short

time period

Sampling works best when

Sampling works best when


Sampling distribution

Door-to-doorDoor-to-door

Direct mailDirect mail

In-store samplingIn-store sampling

On-package samplingOn-package sampling

Event samplingEvent sampling

With magazine/newspaper With magazine/newspaper

Internet Internet

MethodsMethods

Other Other


Bundle of baby products


Coupons

CouponsCouponsUsed by virtually

all packaged goods manufacturers

The oldest and

most widely used sales promotion tool


Coupons (cont.)


Advantages and limitations of coupons

AdvantagesAdvantages DisadvantagesDisadvantages

Appeal to price-sensitive consumer

Appeal to price-sensitive consumer

Can offer price break without retailer’s cooperation

Can offer price break without retailer’s cooperation

Can be effective way to induce trial of new or existing

products

Can be effective way to induce trial of new or existing

products

Can be way to defend market share and encourage

repurchase

Can be way to defend market share and encourage

repurchase

Coupons are often used by loyal consumers who may

purchase anyway

Coupons are often used by loyal consumers who may

purchase anyway

Misredemption and fraudMisredemption and fraud

Difficult to determine how many consumers will use

coupons and when

Difficult to determine how many consumers will use

coupons and when

Declining redemption rates and high costs of couponing

Declining redemption rates and high costs of couponing


Premiums

Free premiums: only require purchase of the product

Free premiums: only require purchase of the product

Self-liquidating premiums: require consumer to pay some or all of the cost of the premium

Self-liquidating premiums: require consumer to pay some or all of the cost of the premium

Two types of premiumsTwo types of premiums

Premium: an offer of an item of merchandise or service either free or at a low cost that is an extra incentive for customers

Premium: an offer of an item of merchandise or service either free or at a low cost that is an extra incentive for customers


McDonald’s Happy Meals


Contest: a promotion where consumers compete for prizes or money on the basis of skills or ability. Winners are determined by judging entries or ascertaining which entry comes closest to some predetermined criteria.

Contest: a promotion where consumers compete for prizes or money on the basis of skills or ability. Winners are determined by judging entries or ascertaining which entry comes closest to some predetermined criteria.

Sweepstakes/games: a promotion where winners are determined purely by chance and cannot require a proof of purchase as a condition for entry. Winners are chosen by random selection from a pool of entries or generation of a number to match those held by game entrants.

Sweepstakes/games: a promotion where winners are determined purely by chance and cannot require a proof of purchase as a condition for entry. Winners are chosen by random selection from a pool of entries or generation of a number to match those held by game entrants.

Contests and sweepstakes


Problems with contests and sweepstakes

Do not contribute to brand buildingDo not contribute to brand building

Focus not on brandFocus not on brand

Use by professionals or hobbyistsUse by professionals or hobbyists

Legal considerationsLegal considerations

ProblemsProblems

May generate negative publicityMay generate negative publicity

EffectivenessEffectiveness


Strategies for improved return on promotions1. Offer a popular grand prize.

2. Ensure that there is a good perceived chance of

winning.

3. Give more than one prize.

4. Have intermittent prize draws.

5. Make it easy to participate.

6. Make it easy to understand.

7. Give instant gratification.

8. Give prizes of interest.

9. Communicate effectively.

10. Focus on the promotion, not the brand.


Other popular consumer sales promotion tools

Bonus packsBonus packs

Frequency/loyalty

programs

Frequency/loyalty

programsEvent marketingEvent marketing

Price-off dealsPrice-off dealsRefunds and rebates

Refunds and rebates

Otherpromotional

tools

Otherpromotional

tools


Loyalty programs


Event marketingEvent marketing: promotion where a company or brand is linked to an event or where a themed activity is developed for the purpose of creating experiences for consumers and promoting a product or service.

Event marketing: promotion where a company or brand is linked to an event or where a themed activity is developed for the purpose of creating experiences for consumers and promoting a product or service.

Event sponsorship: an IMC activity where a company develops actual sponsorship relations with a particular event and provides financial support in return for the right to display a brand name, logo or advertising message and be identified as a supporter of the event.

Event sponsorship: an IMC activity where a company develops actual sponsorship relations with a particular event and provides financial support in return for the right to display a brand name, logo or advertising message and be identified as a supporter of the event.


Summary of consumer-oriented promotions and market objectives


Scope and role

Objectives





Techniques

Sales promotion



Trade-oriented sales promotion objectives

Encourage retailers to display

existing brands

Encourage retailers to display

existing brands

Obtain distribution of new products

Obtain distribution of new products

Maintain trade support for existing

products

Maintain trade support for existing

products

Build retail inventoriesBuild retail inventories

ObjectivesObjectives


Types of trade-oriented promotions

Trade showsTrade shows

Contests and incentivesContests and incentives

Trade allowancesTrade allowances

Point-of-purchase displays

Point-of-purchase displays

Sales training programsSales training programs

Cooperative advertisingCooperative advertising

Buying Allowances

Buying Allowances

Promotional Allowances

Promotional Allowances

Slotting Allowances

Slotting Allowances

Buying allowancesBuying allowances

Promotional allowances

Promotional allowances

Slotting allowances

Slotting allowances


Types of trade promotion


Types of cooperative advertising

Cooperativeadvertising

Cooperativeadvertising

Verticalcooperativeadvertising

Ingredient-sponsored

coop advertising

Horizontal cooperative

advertising


The sales promotion trap


Summary and conclusions Over the past two decades, marketers have been

allocating increased share of promotional budget to sales promotion.

Sales promotion techniques can be: consumer oriented trade oriented.

Sales promotion techniques include sampling, coupons, premiums, competitions, rebates and refunds.

Sales promotion abuse can occur when marketers become overly dependent on sales promotion techniques at the expense of building long-term brand position, brand equity and customer relationships.

16-1 Copyright 2012 McGraw-Hill Australia Pty Ltd PowerPoint Slides t/a Advertising and Promotion 2e by Belch, Belch, Kerr & Powell Chapter 16 Sales promotion.

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