1 Chapter 8 Sales Promotion

2 Sales Promotion “Activity that provides special incentives to encourage immediate response from customers, distributors, and an organization’s sales force.” Consumer Promotion Consumer Promotion Trade Promotion Trade Promotion Incentives to stimulate purchase or loyalty. Incentives to encourage purchase and merchandising support by distributors.

3 Push and Pull Strategies Marketer Wholesaler Retailer Consumer Pull Push A combination of push and pull works best!

4 Sales Promotion Planning “Developing a plan of action for communicating incentives to designated targets.” Promotion plans are often devised by external specialists who are briefed on the assignment. Market Profile Competitive Activity Target Market Profile Promotion Objectives Budget

5 Sales Promotion Plans Marketing Plan Sales Promotion Plan Objectives Strategies Tactics Sales Promotion Plan Objectives Strategies Tactics Fulfillment Evaluation Advertising Strategy Advertising Strategy Other IMC Plans Other IMC Plans

6 Sales Promotion Objectives Consumer Promotion Consumer Promotion Trade Promotion Trade Promotion Trial Purchase Repeat Purchases Brand Loyalty Listings Sales Increases Merchandising Support

7 Sales Promotion Strategy Promotion strategy involves selecting the right combination of consumer promotions and trade promotions to achieve the marketing objectives. Strategy = Consumer Promotion + Trade Promotion + Advertising Strategy Advertising is essential to create awareness and interest in the sales promotion.

8 Logistics and Fulfillment 1.Involves decisions about dates, deadlines, and details. 2.A promotion must run seamlessly from the front-end (announcing the promotion) to the back-end (delivering prizes or merchandise to recipients). 3.Fulfillment is often outsourced to a specialist.

9 Measurement and Evaluation Some typical yardsticks include: Sales increases in promotion period Trial and Loyalty (research may be necessary) Number of entries in a contest Redemption rates Financial Payout

10 Consumer Promotion Execution Coupons Media delivery Product delivery In-store delivery Cross-product delivery A price-saving incentive to trigger new or repeat purchases.

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12 Consumer Promotion Execution Free Samples Free Samples Regular size Trial size In-store taste samples On-site giveaway Free product to encourage trial purchase.

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14 Consumer Promotion Execution Contests Sweepstakes Games Contests Instant Wins Repeat purchase and loyalty-building incentives. They require advertising support to create interest.

15 Consumer Promotion Execution Cash Rebates Cash Rebates Single Purchase Offers Multiple Purchase Offers Slippage Occurs $ returned to consumers after purchase has been made.

16 Consumer Promotion Execution Premium Offer Premium Offer In-pack Mail-in With purchase Product bundling Bonus packs An item given free or at a discounted price with the purchase of a good.

17 Consumer Promotion Execution Loyalty Programs Loyalty Programs Points programs Loyalty cards $ rewards Incentives that encourage long-term loyalty; database management initiatives.

18 Trade Promotion A distributor’s loyalty to any supplier’s products is influenced by the quality and quantity of trade promotion offers. Distributors make money by buying and re-selling goods. Inventory turnover is very important.

19 Trade Promotion Execution A variety of financial incentives are commonly offered to distributors. Trade Allowance Trade Allowance Performance Allowance Performance Allowance Cooperative Advertising Cooperative Advertising Temporary price reduction to stimulate larger purchases. An additional allowance to encourage merchandising support. An accumulating fund that supports retail advertising.

20 Trade Promotion Execution Some trade promotion incentives are controversial. Dealer Premium Dealer Premium An incentive offered a distributor to encourage a “special” purchase. Often called “payola.” Spiff Retail representatives are offered incentives to “push” a sponsors product line.

21 Trade Promotion Execution Some trade promotions support the personal selling effort and in-store merchandising programs. Collateral Material Collateral Material Dealer Display Material Dealer Display Material Material used by sales reps in presentations (price lists, catalogues, brochures, CD- ROMs, etc.). Point-of-purchase display material to encourage purchase (shelf pads, posters, displays, etc.).

22 Planning the Promotion Planning is crucial. Sales promotions are complimentary activities that must be integrated with other marketing and marketing communications programs. 1.How frequent should promotions be? 2.What effect will promotions have on brand image? 3.Will promotions enhance brand equity? Tim Hortons RRRoll Up the Rim meets all of these considerations positively.

23 In Class Assignment 1.What forms of sales promotion are best suited for the following brands – and why? Secret Deodorant Quaker Chewy Granola Bars New Balance Running Shoes Hewlett Packard laser printer Axe deodorant

24 In class Assignment 2. Evaluate the sales promotion strategies used by Tim Hortons. What marketing objectives and marketing communications objectives do they meet? How does Tim Hortons integrate sales promotion with other components of the marketing communications mix?