16

Sales Promotion

McGraw-Hill/Irwin

Copyright 2009 by The McGraw-Hill Companies, Inc. All rights reserved.

Sales Promotion
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.

An extra incentive to buy

A tool to speed up sales

Targeted to different parties

Sales Promotion Vehicles

Consumer-Oriented
Samples

Trade-Oriented
Contests, incentives
Trade allowances Point-of-purchase displays Training programs Trade shows Cooperative advertising

Coupons
Premiums Contests/sweepstakes Refunds/rebates

Bonus Packs
Price-off deals Frequency programs Event marketing

San Diego Padres Boost Attendance

*Click outside of the video screen to advance to the next slide

Long-Term Budget Allocations

100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% 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

Growing power of retailers

Reasons

Declining brand loyalty

Increased promotional sensitivity Brand proliferation Fragmentation of consumer markets Short-term focus of marketers

Increased accountability
Competition Clutter

Consumer Franchise-Building Promotions

Promotional Objectives
Communicate distinctive brand attributes Develop and reinforce brand identity Build long-term brand preference

Techniques and Practices

Frequency programs encourage repeat purchase Sweepstakes & contests to build equity, increase involvement Premium offers that reinforce the brand image and help build equity

Nonfranchise-Building Promotions

Objectives Accelerate the purchase decision process Generate an immediate sales increase

Limitations Do not identify unique brand features Do not contribute to brand identity or image

Contests Can Build Brand Equity

Nonfranchise-Building Promotions
May Include . . .
Price-off deals

Bonus packs

Rebates or refunds

Shortcomings
Customers may buy price rather than brand equity

Trade promotions benefits may not reach customers

If they do, they may lead only to price reductions

Objectives of Consumer-Oriented Promotions

To increase consumption of an established brand To obtain trial and purchase To defend (maintain) current customers

Objectives

Enhance IMC efforts and build brand equity

To target a specific segment

Sampling

Sampling Works Best When

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 Methods

Door-to-door

Methods

Direct mail In-store On package Event

Newspaper/magazine insert
Internet sites

Distributing Samples With Newspapers

Armor All Uses On-Package Samples

Couponing

The oldest and most widely used sales promotion tool

Nearly 240 billion distributed each year in the US

85% of consumers use coupons; 21% use them regularly

Pros and Cons of Coupons

Advantages
Appeals to price sensitive consumer Can offer price break without retailers co-op Effective way to induce trial of products

Disadvantages
Hard to tell how many consumers use them and when Often used by loyal consumers who may purchase anyway Declining redemption rates and high costs of couponing Misredemption and fraud

Can be way to defend market share and encourage repurchase

Coupons are Most Often Used With

Disposable Diapers

Cereal

Laundry Soap

Coupon Distribution

Other Magazines In / On Pack Direct Mail Newspaper Coop Newspaper ROP Freestanding Inserts

The Most Popular Coupons are FSIs

Coupon Redemption Rates

Valpak Enhances Value of Coupons

Types of Coupons

In/on-pack Bounce-back

In-store Tear-off pads

Cross-ruff
Instant

Handouts
Dispensers

Register 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

Types of Premiums
Self-liquidating: consumer required to pay some or all of the cost of the premium

Free: Only requires purchase of the product

Airline Miles are a Popular Incentive

More Consumer-Oriented Promotions

Contests and sweepstakes Refunds and rebates

Bonus packs
Loyalty programs Price-off Deals Event marketing

Trade Oriented Promotions

Objectives

Obtain distribution for new products

Maintain support for established brands Encourage display of products Build retail inventories

Types of Trade Oriented Promotions

Contests and incentives Types

Co-op Advertising
Trade allowances

POP displays
Sales training

Buying Promotional Slotting

Trade shows

Coordinating Sales, Advertising, IMC Tools

Budget allocation

Coordination of themes

Media support and timing

Problems With Sales Promotion

Aspects of Consumer Promotions

Economic

Informative

Affective