Sales Promotions Objective: Introducing sales promotions for tourism and hospitality. In the end of this week, students will understand how sales promotions work and various methods of sales promotions available for tourism and hospitality.

Sales Promotions Are short-term incentives to encourage to purchase or sale of a product or service. Are short-term incentives to encourage to purchase or sale of a product or service. Include a variety of tools designed to simulate market response. Include a variety of tools designed to simulate market response. Ratio in the overall marketing expenditures increased in recent years. Often account for 60 – 70% of the marketing expenditures. Ratio in the overall marketing expenditures increased in recent years. Often account for 60 – 70% of the marketing expenditures. Most effective when used with advertising or personal selling. Most effective when used with advertising or personal selling.

Many promotional messages are delivered through advertising. Many promotional messages are delivered through advertising. However, there is a major difference between sales promotions and advertising. However, there is a major difference between sales promotions and advertising. Advertising is used to increase sales with the help of a specific promotion available for a limited time and increase brand awareness at the same time. Advertising is used to increase sales with the help of a specific promotion available for a limited time and increase brand awareness at the same time. Sales promotions are used with other communications to raise awareness of the brand or the product, to launch a new product. Sales promotions are used with other communications to raise awareness of the brand or the product, to launch a new product.

How Sales Promotions Work Must provide an incentive often in the form of a price discount, reward or upgrade. Must provide an incentive often in the form of a price discount, reward or upgrade. Since they are short-term, consumers must act quickly to take advantage. Since they are short-term, consumers must act quickly to take advantage. Delivered in a communication message; in this way, awareness is raised, interest is created and sales are increased. Delivered in a communication message; in this way, awareness is raised, interest is created and sales are increased. Can be targeted towards customers or members of staff or agents in the distribution network. Can be targeted towards customers or members of staff or agents in the distribution network.

Advantages generating immediate purchase in a large extent generating immediate purchase in a large extent ability to provide quick feedback ability to provide quick feedback ability to add excitement to a service or product ability to add excitement to a service or product flexible timing flexible timing efficiency efficiency

Disadvantages short-term benefits short-term benefits ineffective in building long-term loyalty for company or “brand” ineffective in building long-term loyalty for company or “brand” inability to be used on its own in the long term without other promotional mix elements inability to be used on its own in the long term without other promotional mix elements often misused for just short-term benefits often misused for just short-term benefits

Profiles of Major Sales Promotions Consumer-Promotion Tools Consumer-Promotion Tools Couponing: attract potential guests with a special offer such as a free night’s lodging after a special number of credits. They can be given out personally, included in direct mail advertising or printed in newspapers and magazines. They can increase off-season business with other sales promotions such as bonus offers or discounting. Couponing: attract potential guests with a special offer such as a free night’s lodging after a special number of credits. They can be given out personally, included in direct mail advertising or printed in newspapers and magazines. They can increase off-season business with other sales promotions such as bonus offers or discounting. Product Sampling: introduces new products to the guests, some are free, most effective to Product Sampling: introduces new products to the guests, some are free, most effective to

introduce a product but most expensive as well, determines whether guests like a new product and encourages them to order the item. Contests: give consumers a chance to win something such as cash, trips, goods by luck or through extra effort, can increase sales, should be cost effective - increased sales should offset the cost of contest promotions and prizes. E.g. Coca- Cola New Year’s prize (a BMW) will be one of the customers who sent the correct amount of Coca-Cola lid. Contests: give consumers a chance to win something such as cash, trips, goods by luck or through extra effort, can increase sales, should be cost effective - increased sales should offset the cost of contest promotions and prizes. E.g. Coca- Cola New Year’s prize (a BMW) will be one of the customers who sent the correct amount of Coca-Cola lid. Packages: offer consumers savings off the regular price of a product, have discount price to attract new guests and increase sales. E.g. a Packages: offer consumers savings off the regular price of a product, have discount price to attract new guests and increase sales. E.g. a

holiday package including lodging, transportation, and food and beverage with areasonable price. Premiums: they are given to guests who pay the regular prices for certain products or services. E.g. an upgraded room might be provided or free movie tickets for the restaurant guests. Pizza Hut’s free drinks when a large pizza is ordered. Or when a customer buys one shampoo, he gets the third one free. Premiums: they are given to guests who pay the regular prices for certain products or services. E.g. an upgraded room might be provided or free movie tickets for the restaurant guests. Pizza Hut’s free drinks when a large pizza is ordered. Or when a customer buys one shampoo, he gets the third one free. Gifts or Gift Certificates: free gifts or cash offers, are used by chains or exclusive properties to increase sales. E.g. key chains, T-Shirts… Gifts or Gift Certificates: free gifts or cash offers, are used by chains or exclusive properties to increase sales. E.g. key chains, T-Shirts…

Discounting: straight reduction from the list price of a product during a stated period of time, are used to attract more guests and increase total sales. E.g. one dinner on the menu might be reduced to 50%. Benetton reduces its prices by 20% during the low season. Bonus Offers: the consumer buys a product or service at the regular price and then receives a bonus, generally directed to the regular users, E.g. guest buys three dinners at a regular price and the fourth one becomes free. Or when the customer uses his credit card, each time he gets credits, and when he reaches a certain credit Bonus Offers: the consumer buys a product or service at the regular price and then receives a bonus, generally directed to the regular users, E.g. guest buys three dinners at a regular price and the fourth one becomes free. Or when the customer uses his credit card, each time he gets credits, and when he reaches a certain credit

point, he is entitled to get free gifts such as toasters, hair dryers... Trade-Promotion Tools Trade-Promotion Tools Discounting: straight reduction from the list price on purchases during a stated period of time, encourages dealers to buy in quantity or to carry a new item; dealers can use the discount for immediate profit, for advertising, or for price reductions to their customers. Discounting: straight reduction from the list price on purchases during a stated period of time, encourages dealers to buy in quantity or to carry a new item; dealers can use the discount for immediate profit, for advertising, or for price reductions to their customers. Allowance: promotional money paid by manufacturers to retailers who agree to help promote the manufacturer’s products in some way. E.g. an advertising allowance compensates retailers for advertising the Allowance: promotional money paid by manufacturers to retailers who agree to help promote the manufacturer’s products in some way. E.g. an advertising allowance compensates retailers for advertising the

product. A display allowance compensates them for using special displays. Free goods or push money: cash or gifts to dealers or their sales force to “push” the manufacturer’s goods. Free goods or push money: cash or gifts to dealers or their sales force to “push” the manufacturer’s goods. Specialty advertising items: they carry the company’s name, such as pens, pencils, calendars, paperweights, memo pads, ashtrays... Specialty advertising items: they carry the company’s name, such as pens, pencils, calendars, paperweights, memo pads, ashtrays...

Steps in Using Sales Promotions Setting objectives Setting objectives Selecting the right tools Selecting the right tools Developing the best program Developing the best program Pretesting and implementing it Pretesting and implementing it Evaluating the results Evaluating the results

Setting sales promotion objectives Consumer promotions can be used to; Consumer promotions can be used to; increase short-term sales increase short-term sales help build long-term market share help build long-term market share encourage consumers to try a new product encourage consumers to try a new product lure consumers away from competitors lure consumers away from competitors hold or reward loyal customers hold or reward loyal customers Trade (sales force) promotions can be used to; Trade (sales force) promotions can be used to; build stronger customer relations build stronger customer relations obtain new accounts obtain new accounts

Selecting sales promotion tools Considering the type of market, the sales promotion objectives, the competition, the costs and effectiveness of each tool, managers choose one or more of the sales promotions tools outlined before. Considering the type of market, the sales promotion objectives, the competition, the costs and effectiveness of each tool, managers choose one or more of the sales promotions tools outlined before.

Developing the sales promotion program At this stage, managers need to define the full sales promotion program. This requires them to decide; At this stage, managers need to define the full sales promotion program. This requires them to decide; on the size of the incentive; they must also set conditions, incentives can be offered to everyone or selected groups. on the size of the incentive; they must also set conditions, incentives can be offered to everyone or selected groups. how to promote and distribute the promotion program (e.g. coupons can be distribute by mail) how to promote and distribute the promotion program (e.g. coupons can be distribute by mail) on the sales-promotion budget on the sales-promotion budget

Pretesting and implementing the plan Sales promotion tolls should be pretested to determine whether they are appropriate and of the right size. Sales promotion tolls should be pretested to determine whether they are appropriate and of the right size. However, most companies do not pretest their sales promotions. However, most companies do not pretest their sales promotions. Researchers can ask consumers to rate or rank different promotions. They can also be tested in a limited area. Researchers can ask consumers to rate or rank different promotions. They can also be tested in a limited area.

Evaluating the results Many evaluation methods are available. Most common includes sales comparisons before, during and after a promotion. Many evaluation methods are available. Most common includes sales comparisons before, during and after a promotion. Research also can show who responded to the promotion, their postpromotion buying behavior, how many recall the promotion, what they thought of it, how many accepted it, how it affected their buying patterns. Research also can show who responded to the promotion, their postpromotion buying behavior, how many recall the promotion, what they thought of it, how many accepted it, how it affected their buying patterns. Unfortunately, most companies do not evaluate their promotions. Unfortunately, most companies do not evaluate their promotions.

Creative ideas from the industry The Ritz-Carlton, Powerscourt, Ireland; “Enliven the Senses”; The Ritz-Carlton, Powerscourt, Ireland; “Enliven the Senses”; puts together a two-night getaway package that create value for the guests and receive more per night from them. puts together a two-night getaway package that create value for the guests and receive more per night from them. included two nights deluxe accommodation, breakfast, dinner for two at the upscale restaurant, one-hour aromatherapy massage. included two nights deluxe accommodation, breakfast, dinner for two at the upscale restaurant, one-hour aromatherapy massage.

Four Seasons Hotel Cairo; “The Best of France”; Four Seasons Hotel Cairo; “The Best of France”; Their French Chef created dishes from his home country Provence, two-weeks event included dining at the upscale restaurant of the hotel with French music, flowers and art along with oyster and champagne bar to provide the perfect ambience. Their French Chef created dishes from his home country Provence, two-weeks event included dining at the upscale restaurant of the hotel with French music, flowers and art along with oyster and champagne bar to provide the perfect ambience.

Sources McCabe, S. (2009). Marketing Communications in Tourism and Hospitality: Concepts, Strategies and Cases. Butterworth-Heinemann: Oxford. McCabe, S. (2009). Marketing Communications in Tourism and Hospitality: Concepts, Strategies and Cases. Butterworth-Heinemann: Oxford. Kotler, P.; Bowen, J. and Makens, J. (1999). Marketing for Hospitality and Tourism (2nd ed.). Prentice Hall: New Jersey. Kotler, P.; Bowen, J. and Makens, J. (1999). Marketing for Hospitality and Tourism (2nd ed.). Prentice Hall: New Jersey. Kotler, P.; Bowen, J. and Makens, J. (2010). Marketing for Hospitality and Tourism (5th ed.). Prentice Hall: New Jersey. Kotler, P.; Bowen, J. and Makens, J. (2010). Marketing for Hospitality and Tourism (5th ed.). Prentice Hall: New Jersey. Kotler, P. and Armstrong, G. (2010) Principles of Marketing (13th ed.). Prentice Hall: New Jersey. Kotler, P. and Armstrong, G. (2010) Principles of Marketing (13th ed.). Prentice Hall: New Jersey.