Idil Yaveroglu Lecture Notes Chapters 16 & 17 Sales Promotions, Direct Marketing and Personal Selling Idil Yaveroglu Lecture Notes

Definition Sales Promotion Sales promotions are short-term incentives to encourage the purchase or sale of a product or service.

Sales Promotion Sales Promotions Can be targeted at final buyers, retailers and wholesalers, business customers, and members of the sales force. The use of sales promotions has been growing rapidly. 78% are to the trade with 22% to end consumers

Sales Promotion Objectives -- Consumer Promotions: Increase short-term sales or long-term market share Generate product trial Objectives -- Trade Promotions: Obtaining distribution and shelf space Encouraging retailers to advertise the brand Objectives -- Sales Force Promotions: Signing up new accounts

Consumer Sales Promotions Samples Coupons Cash Refunds (Rebates) Price packs (cents-off deals) Advertising Specialties Premiums Patronage Rewards Point-of-Purchase Communications Contests, Games, and Sweepstakes

Coupons A certificate that entitles consumers to an immediate price reduction when they buy the product Encourage product trial and repurchase Oldest and most widely used form of sales promotion Average redemption rate is only 2% Mostly price sensitive consumers redeem coupons May reduce profitability if used heavily by current users

Premiums A premium is an extra item offered to the consumer usually in exchange for some proof that the promoted product has been purchased. Two for one packs Mc. Donalds Happy Meals Increase consumption Reinforce purchase decision Encourage switching Page #7

Premiums – Mc Donalds Happy Meals 101 Dalmations 86 Million Happy Meals sold Teenie Babies (1997 & 1998) 1st round: 100 Million toys in 10 days Consumers waited longer than 1 hour In some stores police was called in to control crowds 2nd round: 240 million toys sold in one month Some restaurants sold 1500 toys/day

Contest and Sweepstakes Generally designed to create interest in a good or service

Sample A promotional program that allows the consumer to try the product for free Risk free trial Can be done by: Direct mailing Door to door delivery Packaging with another product Retail store demonstration Eg. AOL free trial CD’s…

Rebates A cash refund given for the purchase of a product during a specific period. The purchaser is required to mail in a rebate form and proof of purchase. Allows manufacturers to offer direct price cuts Used to build customer databases Only 5-10% ever bother to fill out and mail rebate request. Page #11

Loyalty Programs Reward loyal consumers for making multiple purchases i.e. frequent flyer programs It is more profitable to retain existing customers than acquire new ones Goal is to build long term mutually beneficial relationships

Point of Purchase Displays Includes all signs (displays, posters, signs, shelf cards, and other visual materials) designed to influence buying decisions at the point of sale Effective for impulse purchase

Sales Promotion Trade Promotion Tools Discounts (also called price-off, off-list, and off- invoice) Allowances Advertising allowances Display allowances Free goods Push money Specialty advertising items

Direct Marketing DIRECT MARKETING: A system of marketing by which an organization communicates directly with the target consumers to generate a response or transaction. Uses a set of direct response media such as direct mail, telemarketing, interactive TV, print, and the Internet.

Forms of Direct Marketing Personal Selling Telephone Marketing Direct-Mail Marketing Catalog Marketing Kiosk Marketing Online Marketing Direct-Response TV Marketing

Direct Marketing and Database Marketing Direct marketing programs employ principles of market segmentation and targeting even more than others. To do so, direct marketers use database marketing – the use of specific information about individual customers and/or prospects to implement more effective and efficient marketing communications.

Direct Marketing Integrated Direct Marketing Public Policy and Ethical Issues Irritation, Unfairness, Deception, and Fraud Invasion of Privacy

Personal Selling The Role of the Sales Force Two-way personal communication More effective than advertising in complex selling situations The sales force plays a major role in most companies The sales force works to represents the company to customers They also represent the customers to the company