Chapter 16 Presentation

• 1. Promotional Strategy MKT4230 Sales Promotion Patricia Knowles, Ph.D. Associate Professor Clemson University 1

2. 2 Promotional Strategy MKT4230 2 Sales Promotion This is the definition of sales promotion: Textbook Page 520 - 521 A direct inducement that offers an extra value or incentive for the product to the sales force, distributors, or ultimate consumer with the primary objective of creating an immediate sale. 3. 3 Promotional Strategy MKT4230 3 Corn Flakes Premium Offer This visual highlights a premium offered by Kelloggs. Textbook Page 520 - 521 4. 4 Promotional Strategy MKT4230 4 Sales Promotion Vehicles These are the types of promotion vehicles that are used for consumer- and trade-oriented promotions. Textbook Pages 521 / Figure 16 - 1 Samples Coupons Premiums Contests/sweepstakes Refunds/rebates Bonus Packs Price-off deals Frequency programs Cooperative advertising Trade allowances Sales training programs Contests, incentives POP displays Trade shows Consumer-OrientedTrade-Oriented Event marketing 5. 5 Promotional Strategy MKT4230 5 Media Often Delivers a Promotion Message This visual shows a print ad for Channel Lock that promotes the Football Challenge Sweepstakes. Textbook Page 510 511 / Exhibit 16 - 2 Football challenge sweepstakes, referral to website 6. 6 Promotional Strategy MKT4230 6 Reasons for Sales Promotion Increases This is a summary of the reasons for growth in sales promotion. Textbook Pages 523 - 527 Declining brand loyalty Increased promotional sensitivity Brand proliferation Fragmented consumer markets Short-term focus of marketers Increased accountability Competition Clutter Growing power of retailers 7. 7 Promotional Strategy MKT4230 7 Sales Promotion Concerns These are some of the perceived negative impacts of sales promotions. Textbook Page 527 Negative impact of sales promotions Fewer dollars to build brand equity Encourages consumers to purchase on the basis of price Detracts from the value of the brand 8. 8 Promotional Strategy MKT4230 8 Consumer Franchise-Building Promotions This chart introduces consumer franchise building promotions. Textbook Pages 528 - 530 Communicate distinctive brand attributes Build long-term brand preference Develop and reinforce brand identity Frequency programs promote repeat purchase Sweepstakes & contests build equity, increase involvement Promotional Objectives Techniques and Practices Premium offers that reinforce brand image & build equity 9. 9 Promotional Strategy MKT4230 9 Nonfranchise-Building Promotions This chart introduces nonfranchise building promotions. Textbook Page 530 Accelerate the purchase decision process Generate an immediate sales increase Objectives Do not identify unique brand features Do not contribute to brand identity or image Limitations 10. 10 Promotional Strategy MKT4230 10 Objectives of Consumer-Oriented Promotions These are the objectives companies hope to achieve by using consumer-oriented sales promotions. Textbook Pages 530 - 533 Increase consumption of an established brand Target a specific segment Enhance IMC efforts and build brand equity Defend (maintain) current customers Obtain trial and purchase 11. 11 Promotional Strategy MKT4230 11 Targeting Specific Consumers This visual highlights a contest targeted to Hispanic consumers. Textbook Page 533 / Exhibit 16 - 9 12. 12 Promotional Strategy MKT4230 12 Sampling These are the conditions under which sampling works best. Textbook Page 533 - 534 The products are of relatively low unit value The product can be broken into a small piece or size that reflects the full features and benefits The purchase cycle is relatively short Sampling Works Best When 13. 13 Promotional Strategy MKT4230 13 Free Friday Promotion This visual contains an ad from Jack in the Boxs Free Friday promotion. Textbook Page 534 / Exhibit 16 - 10 14. 14 Promotional Strategy MKT4230 14 Sampling Methods These are the various ways in which samples may be distributed. Textbook Pages 534 - 535 Door-to-door Direct mail In-store On package Events Newspaper/magazine insert Other methods Methods 15. 15 Promotional Strategy MKT4230 15 Sampling These are the three criteria for an effective sampling program. Textbook Pages 534 - 535 Products are of relatively low unit value, so samples dont cost much Products are divisible and can be broken into small sizes that reflect the products features and benefits Purchase cycle is relatively short so the consumer can soon purchase again Sampling Works Best When 16. 16 Promotional Strategy MKT4230 16 Samples are Often Distributed with Newspapers This is an example of a collateral piece from the media kit of the San Diego Union Tribune newspaper promoting the use of polybags to distribute samples. Textbook Pages 535 - 536 17. This visual shows how Armour All uses on-package sampling for its automotive care products. 17 Promotional Strategy MKT4230 17 Armour All Uses On-Package Samples Textbook Page 531 / Exhibit 16 - 11 18. 18 Promotional Strategy MKT4230 18 Couponing This slide introduces coupons as a sales promotion tool. Textbook Page 536 Nearly 240 billion distributed each year in the US The oldest and most widely used sales promotion tool 85% of consumers use coupons; 21% use them regularly 19. 19 Promotional Strategy MKT4230 19 Pros and Cons of Coupons This chart presents the advantages and disadvantages of coupons. Textbook Pages 536 - 538 Advantages Disadvantages Appeals to price sensitive consumers Can offer discounts without retailer cooperation Effective way to induce trial of products Defends market share and encourages repurchase Often used by loyal consumers who would purchase anyway Misredemption and fraud Hard to tell how many consumers will use them and when Low redemption rates and high costs 20. 20 Promotional Strategy MKT4230 20 Most Often Used Coupons These are the product categories where coupons are used most. Textbook Page 536 Disposable Diapers Cereal Laundry Soap 21. 21 Promotional Strategy MKT4230 21 Coupon Misredemption and Fraud These are some of the ways in which coupon misredemption or fraud occurs: Customer redemption for a product or size not specified on the coupon Salesclerk redemption of coupons for cash Store managers gathering and redeeming coupons without the accompanying sale Criminals gather or print coupons and sell them to unethical merchants Web-source fraud, whereby coupons are produced and distributed online Textbook Pages 537 - 538 22. 22 Promotional Strategy MKT4230 22 Coupon Distribution These are the various ways in which coupons are disseminated to consumers: In order of usage Freestanding inserts (86%) In-store couponing (6%) Direct mail (2%) Magazines (2%) Newspapers (1%) Coupons inside/outside product (1%) Other methods (2%) Textbook Pages 538 - 540 23. 23 Promotional Strategy MKT4230 23 FSIs are the Most Popular Coupon Type This visual shows a Free Standing Insert type of coupon used by Chicken of the Sea to promote various seafood products. Textbook Pages 538 - 539 24. 24 Promotional Strategy MKT4230 24 Coupon Redemption Rates This chart shows the coupon redemption rates of health, beauty, and grocery products by media type. Textbook Pages 538 542 / Figure 16 - 3 25. 25 Promotional Strategy MKT4230 25 Valpak Enhances Value of Coupons This ad promotes the value of the coupons inside. Textbook Pages 538 539 / Exhibit 16 - 13 26. 26 Promotional Strategy MKT4230 26 Types of Coupons These are the types of coupons that are available for in/on-pack and in-store use. Textbook Pages 540 - 541 In-Store Tear-off pads Handouts Dispensers Register printout In/On-Pack Bounce-back Cross-ruff Instant 27. 27 Promotional Strategy MKT4230 27 Cross-Ruff Coupons This visual shows an instant cross-ruff coupon that applies to the purchase of any Real California Cheese and Tia Rosa Tortillas. Textbook Page 540 / Exhibit 16 - 15 28. 28 Promotional Strategy MKT4230 28 Coupons are Available Electronically This is an ad by Cellfire, which distributes coupons to mobile phones. Textbook Page 530 / Exhibit 16 - 16 29. 29 Promotional Strategy MKT4230 29 Premiums This chart defines premiums and differentiates between free and self-liquidating premiums. Textbook Page 542 - 544 An offer of an item, merchandise, or service, free or at a low cost, that is an extra incentive for customers Types of Premiums Free Only requires purchase of the product Self-liquidating Consumer required to pay some or all of the cost of the premium 30. 30 Promotional Strategy MKT4230 30 Airline Miles are a Popular Incentive This visual shows a trade ad from American Airlines AAdvantage Marketing Programs. Textbook Pages 542 - 544 / Exhibit 16 - 18 31. 31 Promotional Strategy MKT4230 31 More Consumer-Oriented Promotions These are additional types of consumer-oriented promotions. Textbook Page 545 - 553 Contests and sweepstakes Refunds and rebates Bonus packs Price-off Deals Loyalty programs Event marketing 32. 32 Promotional Strategy MKT4230 32 Infomercials and Home-Shopping Contests and sweepstakes are an increasingly popular consumer-oriented promotion. There are differences between contests and sweepstakes as stated. Textbook Pages 545 - 553 Sweepstakes Contest Promotion where winners are determined purely by chance Winners chosen by random selection from pool of entries or generation of a number to match those held by game entrants Consumers compete for prizes or money on the basis of skills or ability Winners determined by judging entries or ascertaining which entry is closest to predetermined criteria Cannot require proof of purchase as a condition for entry 33. 33 Promotional Strategy MKT4230 33 Trade Oriented Promotions These are the objectives of trade-oriented promotions. Textbook Pages 554 - 556 Maintain support for established brands Encourage display of products Build retail inventories Obtain distribution for new products Objectives 34. 34 Promotional Strategy MKT4230 34 Types of Trade Oriented Promotions This chart shows the types of incentives that manufacturers use to get wholesalers and retailers to treat them, and their products, favorably. Textbook Pages 556 - 562 Buying Promotional Slotting POP displays Sales training Trade shows Contests and incentives Trade allowances Co-op AdvertisingTypes 35. 35 Promotional Strategy MKT4230 35 Cooperative Advertising This is the definition of trade-oriented cooperative advertising and its three forms: Trade-oriented cooperative advertising The cost of advertising is shared by more than one party Forms Horizontal Ingredient-sponsored Vertical Textbook Pages 560 - 561 36. 36 Promotional Strategy MKT4230 36 Types of Cooperative Advertising These are the various types of cooperative advertising. Textbook Pages 560 - 562 Vertical Cooperative Advertising Ingredient- Sponsored Coop Advertising Horizontal Cooperative Advertising Cooperative Advertising 37. 37 Promotional Strategy MKT4230 37 Promotion Agencies Shifting Role This is how the role of sales promotion agencies is changing. Textbook Page 564 / Figure 16 - 6 Directly accountable Continuing service Agency team contact Creates strategy One full-service firm Equal to ad agency Created tactics Do single project Hired for specialty Single agency contact Inferior to ad agency Indirect accountability Traditional New and Improved 38. 38 Promotional Strategy MKT4230 38 Coordinating Sales, Advertising, and IMC Tools This visual introduces the coordination of sales promotions with other IMC tools. Textbook Pages 562 - 564 Budget allocation Coordination of themes Media support and timing 39. 39 Promotional Strategy MKT4230 39 Sales Promotion Abuse These are the reasons behind the over-use of sales promotions and the negative impact that results from it: Over-use of sales promotions Looking for quick sales fixes Easier to drop prices than to differentiate your product Negative impact A brand that is constantly promoted may lose perceived value Purchases based on discounts, not a favorable attitude Sales promotion trap or spiral Textbook Pages 564 - 565 40. 40 Promotional Strategy MKT4230 40 The Sales Promotion Trap This chart illustrates the sales promotion trap dilemma. Textbook Page 565 / Figure 16 - 7