BUSINESS MARKET TECHNIQUES Chapter 11: SALES PROMOTION: CONSUMER, TRADE, and BUSINESS MARKET TECHNIQUES 11.1

Basic Forms of Sales Promotion Trade-Market Sales Promotion Trade Market Sales Promotion Business-Market Sales Promotion 11..2

The Importance and Growth of Sales Promotion SALES PROMOTION IS GROWING FASTER THAN ADVERTISING GROWTH IN THE USE OF SALES PROMOTION Demand for Greater Accountability Short-Term Orientation Consumer Response to Promotions Proliferation of Brands Increased Power of Retailers Media Clutter 11..3

Sales Promotion Techniques, Like Couponing, Are Designed to Have a Short-Term Effect on Sales

Sales Promotion in the Consumer Market OBJECTIVES FOR CONSUMER-MARKET SALES PROMOTION Stimulate Trial Purchase Stimulate Repeat Purchases Stimulate Larger Purchases Introduce a New Brand Combat or Disrupt Competitors’ Strategies Contribute to Integrated Marketing Communications 11.5

Sales Promotion in the Consumer Market (con’t) CONSUMER MARKET SALES PROMOTION TECHNIQUES Coupons Oldest and Most Widely Used Sales Promotion Annually, 300 Billion Distributed Many Advantages Also Problems Price-Off Deals – Offers Consumers ¢ or $ off Merchandise Premiums and Advertising Specialties Premiums – Items offered Free or Reduced w/Purchase Free Premium – Provides an Item at No Cost Self-Liquidating Premium – Consumer Pays Most or All Cost of Premium 11.6

“Price Off” Deals Are Commonly Used by Local Retailers 11.7

Sales Promotion in the Consumer Market (con’t) CONSUMER MARKET SALES PROMOTION TECHNIQUES (con’t) Contests and Sweepstakes Contest – Consumers Compete for Prizes Sweepstakes – Promo where Winners are Determined by Chance Substantial Problems with Both Regulations and Restrictions Game Becomes Primary Focus; Brand Secondary Hard to Get Message Across in Context of Game 11.8

Sales Promotion in the Consumer Market (con’t) CONSUMER MARKET SALES PROMOTION TECHNIQUES (con’t) Sampling and Trial Offers Sampling – Provide Consumers with Trial Opportunity In-Store Sampling Door-to-Door Sampling Mail Sampling Newspaper Sampling On-Package Sampling Mobile Sampling Trial Offers 11.9

Sampling is an Effective Way to Create Trial-Use Within Appropriate Target Markets

Sales Promotion in the Consumer Market (con’t) CONSUMER MARKET SALES PROMOTION TECHNIQUES (con’t) Phone and Gift Cards Product Placement (Brand Placement) Rebates Frequency Programs Event Sponsorship 11.11

Sales Promotion in the Trade and Business Markets OBJECTIVES FOR PROMOTIONS IN THE TRADE MARKET Obtain Initial Distribution Increase Order Size Encourage Cooperation with Consumer-Market Sales Promotion Increase Store Traffic 11.12

Sales Promotion in the Trade and Business Markets TRADE-MARKET SALES PROMOTION TECHNIQUES Push Strategy – Sales Promotions Directed at Trade Point-of-Purchase Displays Incentives Allowances Merchandise Allowances Slotting Fees Bill Back Allowances Off-Invoice Allowances Sales-Training Programs Cooperative (Co-op) Advertising Vertical Cooperative Advertising 11.13

Sales Promotion in the Trade and Business Markets BUSINESS MARKET SALES PROMOTION TECHNIQUES Trade Shows Business Gifts Premium and Specialty Advertising Trial Offers Frequency Programs 11.14

Loyalty Among Businesses Frequency Programs Encourage Brand Loyalty Among Businesses 11.15

Sales Promotion, the Internet, and New Media USE OF SALES PROMOTION BY INTERNET COMPANIES Sampling Incentives Loyalty Programs Virtual Tour of Prizes in Contests Use of the Internet and New Media to Implement Sales Promotion On-Line Promotional Stores Other On-Line Companies Help Sweepstakes 11.16

The Risks of Sales Promotions CREATING A PRICE ORIENTATION BORROWING FROM FUTURE SALES ALIENATING CURRENT CUSTOMERS TIME AND EXPENSE LEGAL CONSIDERATIONS 11.17

The Coordination Challenge Message Coordination Message Should Attract Attention or Offer Consumer Increased Value: Reduce Price, Chance to Win a Prize Attention and Value Act as Incentive to Choose Brand Hard to Coordinate Promotion Message with Advertising Media Coordination Reaching Right Target is Critical Advertising Should Always Precede Sales Promotion 11.18

Conclusions From Recent Research SHORT-TERM PRODUCTIVITY OF PROMOTIONS MUCH MORE DRAMATIC THAN SHORT-TERM ADVERTISING EFFECTS 1% REDUCTION IN PRICE PRODUCES GREATER RESULTS THAN 1% INCREASE IN ADVERTISING SALES PROMOTION RARELY GENERATES LONG-TERM EFFECTS MOST POWERFUL EFFECTS COME FROM ADVERTISING & SALES PROMOTION USED TOGETHER 11.19