Irwin/McGraw-Hill Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved. 1-1

Irwin/McGraw-Hill Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved. 1-2 McGraw-Hill/Irwin Copyright © 2004 by The McGraw-Hill Companies, Inc. All rights reserved. Chapter 18 Consumer and Trade Sales Promotion

Irwin/McGraw-Hill Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved. 1-3 Explain the role and significance of sales promotion in the marketing communications mix. Understand why sales promotion expenditures account for a significant portion of many firms’ marketing communications budgets. Discuss the objectives and techniques of consumer sales promotion. After studying this chapter you should be able to:

Irwin/McGraw-Hill Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved. 1-4 Discuss the objectives and techniques of trade sales promotion. Explain the limitations of sales promotion. Realize how deceptive and fraudulent sales promotion victimizes both consumers and marketers. After studying this chapter you should be able to:

Irwin/McGraw-Hill Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved. 1-5 The Role of Sales Promotion Sales Promotion:  Consists of media and non-media marketing communications employed for a predetermined, limited time to stimulate trial, increase consumer demand, or improve product availability. Consumer Sales Promotion:  Directed at Consumers Trade Sales Promotion:  Directed at Resellers

Irwin/McGraw-Hill Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved. 1-6 The Significance of Sales Promotion Sales Promotion Expenditures Consumer Factors Impact of Technology Increased Retail Power

Irwin/McGraw-Hill Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved. 1-7 The 10 Commandments of Creative Sales Promotion 1. Set specific objectives 2. Know how basic promotion techniques work 3. Use simple, attention-getting copy 4. Use contemporary, easy-to-track graphics 5. Clearly communicate the concept 6. Reinforce the brand’s advertising message. 7. Support the brand’s positioning and image. 8. Coordinate promotional efforts with other marketing plans. 9. Know the media you work with. 10. Involve the trade.

Irwin/McGraw-Hill Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved. 1-8 Consumer Sales Promotion Objectives of Consumer Sales Promotion: Stimulate trial Increase consumer inventory and consumption Encourage repurchase Neutralize competitors Increase sales of complementary products Stimulate impulse purchasing Allow flexible pricing

Irwin/McGraw-Hill Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved. 1-9 Consumer Sales Promotion Techniques Price Deals Coupons Rebates Cross-Promotions Contests, Sweepstakes, Games Premiums Sampling Advertising Specialties Price Deals Coupons Rebates Cross-Promotions Contests, Sweepstakes, Games Premiums Sampling Advertising Specialties

Irwin/McGraw-Hill Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved Trade Sales Promotion Objectives of Trade Sales Promotion: Gain/maintain distribution Influence resellers to promote product Influence resellers to offer price discount Increase reseller inventory Defend against competitors Avoid reduction of normal prices

Irwin/McGraw-Hill Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved Trade Sales Promotion Techniques Trade Allowances Dealer Loaders Trade Contests Point-of-Purchase Displays Trade Shows Training Programs Push Money

Irwin/McGraw-Hill Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved Limitations of Sales Promotion It typically cannot reverse a genuine declining sales trend. Marketers cannot reasonable expect sales promotion to convert refection of an inferior product into acceptance. Sales promotion may even weaken the brand image. Sales promotion has also been blamed for encouraging competitive retaliation.

Irwin/McGraw-Hill Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved Limitations of Sales Promotion Short-term volume gain at the sacrifice of profits.  Forward Buying: People buy more than they need at the deal price.  Pay-for-Performance Trade Promotions: Retailers are rewarded for making sales to consumers rather than making purchases from manufacturers.

Irwin/McGraw-Hill Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved Ethical and Legal Issues in Sales Promotion Deceptive Sales Promotion Fraud: The Fake Storefront Stuffing the Ballot Box Playing the Middleman The Redemption Scam

Irwin/McGraw-Hill Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved Ethical and Legal Issues in Sales Promotion Diverting (or Arbitraging): Secretly purchasing a product where it is less expensive, usually as a result of a trade promotion, and reselling in areas where prices are higher.

Irwin/McGraw-Hill Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved Global Concerns The Global Perspective requires marketers to make an extra effort to become familiar with local laws and customs.