S ALES P ROMOTION - 1 MKT 405: Distribution Management M Wahidul Islam Summer 2014

Elements of Distribution Management Planning, Forecasting & Budgeting Sales Force Management Product Pricing and Promotion Product Visibility Distribution Channels Channel Information Systems Warehousing and Logistics

W HAT IS S ALES P ROMOTION ? “Sales Promotion, a key ingredient in marketing campaigns, consist of a diverse collection of incentive tools, mostly short- term, designed to stimulate quicker or greater purchase of particular products or services by consumers or the trade” Philip Kotler

B ENEFITS OF S ALES P ROMOTION M ANUFACTURERS Price differentiation Trial Increase in sales Build a database Easy to design and implement and less-expensive Useful for small player

B ENEFITS OF S ALES P ROMOTION C ONSUMERS Loyals vs Switchers Price sensitive customers B ENEFITS OF S ALES P ROMOTION T RADERS New product introduction Increased sales traffic

D RAWBACKS OF S ALES P ROMOTION Manufacturers Reduction in brand value Dilution in quality image Consumer Confusion Traders Price-sensitivity Increased competition

D IFFERENT C ONSUMER P ROMOTIONS Sampling Coupons Premiums (gifts) Contests & Sweepstakes (or Prizes) Refunds and rebates Price-offs Bonus packs Frequency programs Event marketing Point-of-Purchase

SAMPLING In-store distribution Direct from retail store Direct sampling Delivered to a mailing address (home / office) Response sampling Only respondents get the free sample Media sampling Sample is included in the media outlet Selective sampling Samples are distributed at a site / event / Sampling In-store distribut ion Direct sampling Response sampling Media sampling Selective sampling Sampling is one of the most expensive ways of consumer promotion as there is no guarantee that it will lead to a future purchase. However, most effective for launching a new product. Sampling is one of the most expensive ways of consumer promotion as there is no guarantee that it will lead to a future purchase. However, most effective for launching a new product.

C OUPONS – A PRICE REDUCTION OFFER Instant redemption coupon Can immediately redeem the coupon while making the purchase Bounce – back coupons Coupons are placed inside packages so that consumers are encouraged for repeat purchase Scanner – delivered coupons When competitors products are scanned, a coupon is given Cross-ruff coupons Coupon for one product places inside another (bundling) Response offer coupons Issued on request of a customer Coupons Instant redemptio n coupon Bounce – back coupons Scanner – delivered coupons Cross- ruff coupons Response offer coupons Can be difficult to manage. Brands that are readily recalled by consumer, face value of the coupon, the ease of distribution method and flexibility are key point in successful promotion planning using coupons. Can be difficult to manage. Brands that are readily recalled by consumer, face value of the coupon, the ease of distribution method and flexibility are key point in successful promotion planning using coupons.

P REMIUMS / G IFTS In or On package premiums Small gift inside / strapped on the package Free in the mail premiums After proof of purchase are received by the manufacturer Self liquidating premiums Consumers pays the cost for the gift and the handling as well Store or manufacturer premiums Given by manufacturer or retailer when the customer buys the product Have high cost, but can add value to the product / brand. They can attract new customers and thank the existing customers. Have high cost, but can add value to the product / brand. They can attract new customers and thank the existing customers.

O THERS Contests Consumer buy the product Sweepstakes Participants do not require to buy the products Refunds and Rebates Price-offs Bonus packs Frequency and loyalty programs Event marketing and Event Sponsorship Point-of-Purpose Includes posters, danglers, banners, stand-up racks, brand logos, products dispensers

R EFERENCES Chapter 17 – Sales Promotion Havaldar K. and Cavale V. M. (2011) Sales and Distribution Management – Text and Cases (2 nd Edition) Delhi: Tata McGraw-Hill Education Private Limited

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