Sales Promotion
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Sales Promotion
Learning Objectives
• To understand the role of sales promotion in a company’s integrated marketing communications program and to examine why it is increasingly important.
• To examine the various objectives of sales promotion programs.
• To examine the types of consumer and trade-oriented sales promotion tools and factors to consider in using them.
• To understand how sales promotion is coordinated with advertising.
• To consider potential problems and abuse by companies in their use of sales promotion.
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.”
Sales Promotion Vehicles
SamplesSamples
CouponsCoupons
PremiumsPremiums
Contests/sweepstakesContests/sweepstakes
Refunds/rebatesRefunds/rebates
Bonus PacksBonus Packs
Price-off dealsPrice-off deals
Frequency programsFrequency programs
Cooperative advertisingCooperative advertising
Trade allowancesTrade allowances
Training programsTraining programs
Contests, incentivesContests, incentives
Point-of-purchase displaysPoint-of-purchase displays
Trade showsTrade shows
Consumer-Oriented Trade-Oriented
Event marketingEvent marketing
Long-Term Budget Allocations
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
‘94 ‘95 ‘96 ‘97 '98 ‘99 ‘00 ‘01 ‘02 ‘03 ‘04 ‘05
Consumer Promotions
Media Advertising
Trade Promotions
% of Total Promotional Dollars, 3-yr Moving Average
Media Often Delivers a Promotion Message
Sales Promotion Increases
Declining brand loyaltyDeclining brand loyalty
Increased promotional sensitivityIncreased promotional sensitivity
Brand proliferationBrand proliferation
Fragmentation of consumer marketsFragmentation of consumer markets
Short-term focus of marketersShort-term focus of marketers
Increased accountabilityIncreased accountability
CompetitionCompetition
ClutterClutter
ReasonsReasons
Growing power of retailersGrowing power of retailers
Consumer Franchise-Building Promotions
Communicate distinctive brand attributes
Communicate distinctive brand attributes Build long-term
brand preferenceBuild long-term
brand preferenceDevelop and
reinforce brand identity
Develop and reinforce brand
identity
“Frequency” programs encourage repeat purchase
“Frequency” programs encourage repeat purchase
Sweepstakes & contests to build equity, increase
involvement
Sweepstakes & contests to build equity, increase
involvement
Promotional ObjectivesPromotional Objectives
Techniques and Practices
Techniques and Practices
Premium offers that reinforce the brand image and help build equity
Premium offers that reinforce the brand image and help build equity
Non franchise-Building Promotions
Accelerate the purchase decision
process
Accelerate the purchase decision
process
Generate an immediate sales
increase
Generate an immediate sales
increase
ObjectivesObjectives
Do not identify unique brand
features
Do not identify unique brand
features
Do not contribute to brand identity or
image
Do not contribute to brand identity or
image
LimitationsLimitations
Contests Can Build Brand Equity
Non franchise-Building Promotions
Price-off dealsPrice-off deals Rebates or refunds
Rebates or refundsBonus packsBonus packs
May Include . . .May Include . . .
Shortcomings Shortcomings
Trade promotions
benefits may not reach customers
Trade promotions
benefits may not reach customers
If they do, they may lead only to price reductions
If they do, they may lead only to price reductions
Customers may “buy price” rather than
brand equity
Customers may “buy price” rather than
brand equity
Objectives of Consumer-Oriented Promotions
To increase consumption of an established
brand
To increase consumption of an established
brand
To target a specific segment
To target a specific segment
Enhance IMC efforts and build
brand equity
Enhance IMC efforts and build
brand equity
To defend (maintain)
current customers
To defend (maintain)
current customers
To obtain trial and purchaseTo obtain trial and purchase ObjectivesObjectives
Sampling
The products are of relatively low unit value
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 product can be broken into a
small piece or size that reflects the full features and
benefits
The purchase cycle is
relatively short
The purchase cycle is
relatively short
Sampling Works Best WhenSampling Works Best When
Sampling Methods
Door-to-doorDoor-to-door
Direct mailDirect mail
In-storeIn-store
On packageOn package
Event Event
Newspaper/magazine insertNewspaper/magazine insert
Internet sitesInternet sites
MethodsMethods
Distributing Samples With Newspapers
Armor All Uses On-Package Samples
Couponing
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
Pros and Cons of Coupons
Advantages Disadvantages
Appeals to price sensitive consumer
Appeals to price sensitive consumer
Can offer price break without retailers co-opCan offer price break
without retailers co-op
Effective way to induce trial of products
Effective way to induce trial of products
Can be way to defend market share and
encourage repurchase
Can be way to defend market share and
encourage repurchase
Often used by loyal consumers who may
purchase anyway
Often used by loyal consumers who may
purchase anyway
Misredemption and fraudMisredemption and fraud
Hard to tell how many consumers use them and
when
Hard to tell how many consumers use them and
when
Declining redemption rates and high costs of
couponing
Declining redemption rates and high costs of
couponing
Coupons are Most Often Used With…
DisposableDiapers
DisposableDiapers CerealCereal Laundry
SoapLaundry
Soap
Coupon Distribution
OtherMagazinesIn / On PackDirect MailNewspaper CoopNewspaper ROPFreestanding Inserts
The Most Popular Coupons are FSIs
Coupon Redemption Rates
Valpak Enhances Value of Coupons
Types of Coupons
In/on-packIn/on-pack
Bounce-backBounce-back
Cross-ruffCross-ruff
InstantInstant
Tear-off padsTear-off pads
In-storeIn-store
HandoutsHandouts
DispensersDispensers
Register printoutRegister printout
Coupons are Available Electronically
Premiums
An offer of an item, merchandise, or service, free or at a low cost, that is
an extra incentive for customers
An offer of an item, merchandise, or service, free or at a low cost, that is
an extra incentive for customers
Types of PremiumsTypes of Premiums
Free: Only requires purchase of the product
Free: Only requires purchase of the product
Self-liquidating: consumer required to pay some or all of the cost of the premium
Self-liquidating: consumer required to pay some or all of the cost of the premium
Airline Miles are a Popular Incentive
More Consumer-Oriented Promotions
Contests and sweepstakesContests and sweepstakes
Refunds and rebates
Refunds and rebates
Bonus packsBonus packs
Price-off DealsPrice-off Deals
Loyalty programsLoyalty programs
Event marketingEvent marketing
Trade Oriented Promotions
Maintain support for established brandsMaintain support for established brands
Encourage display of productsEncourage display of products
Build retail inventoriesBuild retail inventories
Obtain distribution for new productsObtain distribution for new products
ObjectivesObjectives
Types of Trade Oriented Promotions
BuyingBuying
PromotionalPromotional
SlottingSlotting
POP displaysPOP displays
Sales trainingSales training
Trade showsTrade shows
Contests and incentivesContests and incentives
Trade allowancesTrade allowances
Co-op AdvertisingCo-op AdvertisingTypesTypes
Coordinating Sales, Advertising, IMC Tools
Budget allocation
Coordination of themes
Media support and timing
Problems With Sales Promotion
Aspects of Consumer Promotions
EconomicEconomic
InformativeInformative AffectiveAffective