Sales Promotion Overview and the Role of Trade Promotions Chapter Seventeen Sales Promotion Overview and the Role of Trade Promotions

Introduction to Sales Promotion What Exactly is Sales Promotion? Any incentive used by manufacturers to induce the trade and/or consumers to buy a brand and encourage sales force to aggressively sell it.

Introduction to Sales Promotion What Exactly is Sales Promotion? The incentive is additional to the basic benefits provided by the brand and temporarily changes its perceived price or value

Introduction to Sales Promotion Promotion Targets All three groups – the sales force, retailers and consumers – are targets of sales promotional efforts

Brand-Level Promotional Imperatives

Increased Budgetary Allocations to Promotions Advertising spending as a percentage of total marketing communications expenditures has declined in recent years. Promotional spending, however, has steadily increased.

Factors Accounting for the Shift Push Strategy Using promotional efforts to push product through the selling chain Pull Strategy Using Consumer advertising to pull product through the channel of distribution

Push and Pull Strategies

Factors Accounting for the Shift Balance-of-power shift from manufacturers to retailers Increased brand parity and price sensitivity Reduced brand loyalty Splintering of the mass market and reduced media effectiveness Short-term orientation and corporate reward structures Consumer responsiveness

Sales Promotions - Can Stimulate sales force Invigorate mature brand sales Facilitate introduction of new products Increase merchandising space Neutralize competitive ads Obtain trail purchases Hold current users Increase product usage Preempt competition Reinforce advertising

Sales Promotions - Can’t Compensate for lack of training and advertising Give a long-term reason for repeat purchases of the brand Permanently stop an established brand’s declining sales or basic non-acceptance

Generalizations About Promotions 1. Temporary retail price reductions substantially increase sales 2. The greater the frequency of deals, the lower the height of the deal spike 3. The frequency of deals changes the consumer’s reference price 4. Retailers pass-through less than 100% of trade deals 5. Higher market share brands are less deal elastic

Generalizations About Promotions 6. Advertised promotions can result in increased store traffic 7. Feature advertising and displays operate synergistically to influence sales of discounted brands 8. Promotions in one product category affect sales of complementary and competitive products 9. The effects of promoting higher-and lower-quality brands are asymmetric