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
16-2Copyright 2012 McGraw-Hill Australia Pty Ltd PowerPoint Slides t/a Advertising and Promotion 2e by Belch, Belch, Kerr & Powell
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.
16-3Copyright 2012 McGraw-Hill Australia Pty Ltd PowerPoint Slides t/a Advertising and Promotion 2e by Belch, Belch, Kerr & Powell
Scope and role
Objectives
Consumer-oriented sales promotion
Sales promotion abuse
Trade-oriented sales promotion
Growth of sales promotion
Techniques
Sales promotion
TechniquesObjectives
16-4Copyright 2012 McGraw-Hill Australia Pty Ltd PowerPoint Slides t/a Advertising and Promotion 2e by Belch, Belch, Kerr & Powell
Australia’s national dish
16-5Copyright 2012 McGraw-Hill Australia Pty Ltd PowerPoint Slides t/a Advertising and Promotion 2e by Belch, Belch, Kerr & Powell
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.
16-6Copyright 2012 McGraw-Hill Australia Pty Ltd PowerPoint Slides t/a Advertising and Promotion 2e by Belch, Belch, Kerr & Powell
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
16-7Copyright 2012 McGraw-Hill Australia Pty Ltd PowerPoint Slides t/a Advertising and Promotion 2e by Belch, Belch, Kerr & Powell
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
16-8Copyright 2012 McGraw-Hill Australia Pty Ltd PowerPoint Slides t/a Advertising and Promotion 2e by Belch, Belch, Kerr & Powell
Sony lives an innovative sales promotion
16-9Copyright 2012 McGraw-Hill Australia Pty Ltd PowerPoint Slides t/a Advertising and Promotion 2e by Belch, Belch, Kerr & Powell
Sales promotion for a tourist destination
16-10Copyright 2012 McGraw-Hill Australia Pty Ltd PowerPoint Slides t/a Advertising and Promotion 2e by Belch, Belch, Kerr & Powell
Scope and role
Objectives
Consumer-oriented sales promotion
Sales promotion abuse
Trade-oriented sales promotion
Growth of sales promotion
Techniques
Sales promotion
TechniquesObjectives
16-11Copyright 2012 McGraw-Hill Australia Pty Ltd PowerPoint Slides t/a Advertising and Promotion 2e by Belch, Belch, Kerr & Powell
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.
16-12Copyright 2012 McGraw-Hill Australia Pty Ltd PowerPoint Slides t/a Advertising and Promotion 2e by Belch, Belch, Kerr & Powell
Sales promotion within IMC
• Insert Figure 16.2• Development of promotional strategy
16-13Copyright 2012 McGraw-Hill Australia Pty Ltd PowerPoint Slides t/a Advertising and Promotion 2e by Belch, Belch, Kerr & Powell
Growth of sales promotion
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
16-14Copyright 2012 McGraw-Hill Australia Pty Ltd PowerPoint Slides t/a Advertising and Promotion 2e by Belch, Belch, Kerr & Powell
Sales promotion—NZ Style
16-15Copyright 2012 McGraw-Hill Australia Pty Ltd PowerPoint Slides t/a Advertising and Promotion 2e by Belch, Belch, Kerr & Powell
The shifting role of the sales promotion agency
16-16Copyright 2012 McGraw-Hill Australia Pty Ltd PowerPoint Slides t/a Advertising and Promotion 2e by Belch, Belch, Kerr & Powell
Scope and role
Objectives
Consumer-oriented sales promotion
Sales promotion abuse
Trade-oriented sales promotion
Growth of sales promotion
Techniques
Sales promotion
TechniquesObjectives
16-17Copyright 2012 McGraw-Hill Australia Pty Ltd PowerPoint Slides t/a Advertising and Promotion 2e by Belch, Belch, Kerr & Powell
Consumer-oriented 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
16-18Copyright 2012 McGraw-Hill Australia Pty Ltd PowerPoint Slides t/a Advertising and Promotion 2e by Belch, Belch, Kerr & Powell
Masterstrokes with MasterChef
16-19Copyright 2012 McGraw-Hill Australia Pty Ltd PowerPoint Slides t/a Advertising and Promotion 2e by Belch, Belch, Kerr & Powell
Schick uses sales promotion to encourage trial
16-20Copyright 2012 McGraw-Hill Australia Pty Ltd PowerPoint Slides t/a Advertising and Promotion 2e by Belch, Belch, Kerr & Powell
A new take on designer wear
16-21Copyright 2012 McGraw-Hill Australia Pty Ltd PowerPoint Slides t/a Advertising and Promotion 2e by Belch, Belch, Kerr & Powell
Packaged-goods manufacturers’ consumer promotions
16-22Copyright 2012 McGraw-Hill Australia Pty Ltd PowerPoint Slides t/a Advertising and Promotion 2e by Belch, Belch, Kerr & Powell
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
16-23Copyright 2012 McGraw-Hill Australia Pty Ltd PowerPoint Slides t/a Advertising and Promotion 2e by Belch, Belch, Kerr & Powell
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
16-24Copyright 2012 McGraw-Hill Australia Pty Ltd PowerPoint Slides t/a Advertising and Promotion 2e by Belch, Belch, Kerr & Powell
Bundle of baby products
16-25Copyright 2012 McGraw-Hill Australia Pty Ltd PowerPoint Slides t/a Advertising and Promotion 2e by Belch, Belch, Kerr & Powell
Coupons
CouponsCouponsUsed by virtually
all packaged goods manufacturers
The oldest and
most widely used sales promotion tool
16-26Copyright 2012 McGraw-Hill Australia Pty Ltd PowerPoint Slides t/a Advertising and Promotion 2e by Belch, Belch, Kerr & Powell
Coupons (cont.)
16-27Copyright 2012 McGraw-Hill Australia Pty Ltd PowerPoint Slides t/a Advertising and Promotion 2e by Belch, Belch, Kerr & Powell
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
16-28Copyright 2012 McGraw-Hill Australia Pty Ltd PowerPoint Slides t/a Advertising and Promotion 2e by Belch, Belch, Kerr & Powell
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
16-29Copyright 2012 McGraw-Hill Australia Pty Ltd PowerPoint Slides t/a Advertising and Promotion 2e by Belch, Belch, Kerr & Powell
McDonald’s Happy Meals
16-30Copyright 2012 McGraw-Hill Australia Pty Ltd PowerPoint Slides t/a Advertising and Promotion 2e by Belch, Belch, Kerr & Powell
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
16-31Copyright 2012 McGraw-Hill Australia Pty Ltd PowerPoint Slides t/a Advertising and Promotion 2e by Belch, Belch, Kerr & Powell
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
16-32Copyright 2012 McGraw-Hill Australia Pty Ltd PowerPoint Slides t/a Advertising and Promotion 2e by Belch, Belch, Kerr & Powell
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.
16-33Copyright 2012 McGraw-Hill Australia Pty Ltd PowerPoint Slides t/a Advertising and Promotion 2e by Belch, Belch, Kerr & Powell
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
16-34Copyright 2012 McGraw-Hill Australia Pty Ltd PowerPoint Slides t/a Advertising and Promotion 2e by Belch, Belch, Kerr & Powell
Loyalty programs
16-35Copyright 2012 McGraw-Hill Australia Pty Ltd PowerPoint Slides t/a Advertising and Promotion 2e by Belch, Belch, Kerr & Powell
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.
16-36Copyright 2012 McGraw-Hill Australia Pty Ltd PowerPoint Slides t/a Advertising and Promotion 2e by Belch, Belch, Kerr & Powell
Summary of consumer-oriented promotions and market objectives
16-37Copyright 2012 McGraw-Hill Australia Pty Ltd PowerPoint Slides t/a Advertising and Promotion 2e by Belch, Belch, Kerr & Powell
Scope and role
Objectives
Consumer-oriented sales promotion
Sales promotion abuse
Trade-oriented sales promotion
Growth of sales promotion
Techniques
Sales promotion
TechniquesObjectives
16-38Copyright 2012 McGraw-Hill Australia Pty Ltd PowerPoint Slides t/a Advertising and Promotion 2e by Belch, Belch, Kerr & Powell
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
16-39Copyright 2012 McGraw-Hill Australia Pty Ltd PowerPoint Slides t/a Advertising and Promotion 2e by Belch, Belch, Kerr & Powell
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
16-40Copyright 2012 McGraw-Hill Australia Pty Ltd PowerPoint Slides t/a Advertising and Promotion 2e by Belch, Belch, Kerr & Powell
Types of trade promotion
16-41Copyright 2012 McGraw-Hill Australia Pty Ltd PowerPoint Slides t/a Advertising and Promotion 2e by Belch, Belch, Kerr & Powell
Types of cooperative advertising
Cooperativeadvertising
Cooperativeadvertising
Verticalcooperativeadvertising
Ingredient-sponsored
coop advertising
Horizontal cooperative
advertising
16-42Copyright 2012 McGraw-Hill Australia Pty Ltd PowerPoint Slides t/a Advertising and Promotion 2e by Belch, Belch, Kerr & Powell
The sales promotion trap
16-43Copyright 2012 McGraw-Hill Australia Pty Ltd PowerPoint Slides t/a Advertising and Promotion 2e by Belch, Belch, Kerr & Powell
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.