Sales Promotion © 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin

An extra incentive to buy A tool to speed up sales An extra incentive to buy A tool to speed up sales Targeted to different parties 1. Defining Sales Promotion © 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin “A direct inducement that offers an extra value or incentive for the product to the sales force, distributors, or the ultimate consumer with the primary objective of creating an immediate sale.”

Growing power of retailers Declining brand loyalty Increased promotional sensitivity Brand proliferation Fragmentation of consumer markets Short-term focus of marketers Increased accountability Competition Clutter Competition Increased accountability Short-term focus of marketers Fragmentation of consumer markets Brand proliferation Increased promotional sensitivity Declining brand loyalty Growing power of retailers 2. Reasons for Increase in Sales Promotion © 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Reasons

3. Sales Promotion Vehicles © 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Consumer-Oriented Trade-Oriented

Samples Coupons Premiums Contests/sweepstakes Refunds/rebates Bonus Packs Price-off deals Frequency programs 3. Sales Promotion Vehicles © 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Consumer-Oriented Event marketing

To increase consumption of an established brand To target a specific segment Enhance IMC efforts and build brand equity To defend (maintain) current customers To obtain trial and purchase Objectives of Consumer- Oriented Sales Promotion © 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Objectives

The products are of relatively low unit value, so samples don’t cost much The products are divisible and can be broken into small sizes that can reflect the products features and benefits The purchase cycle is relatively short so the consumer can purchase in a relatively short time period The products are of relatively low unit value, so samples don’t cost much The products are divisible and can be broken into small sizes that can reflect the products features and benefits Sampling © 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Sampling Works Best When

Event sampling Door-to-door Direct mail Central location distribution In-store sampling Cross-product sampling Co-op package distribution With newspaper/magazine Internet sites Event sampling With newspaper/magazine Co-op package distribution Cross-product sampling In-store sampling Central location distribution Direct mail Door-to-door Sampling Methods © 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Methods

Free Premiums: Only require purchase of the product Self-liquidating Premiums: require consumer to pay some or all of the cost of the premium Free Premiums: Only require purchase of the product Premium: an offer of an item of merchandise or service either free or at a low cost that is an extra incentive for customers Premiums © 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Two Types of Premiums

Contests and Sweepstakes © 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Contest: a promotion where consumers compete for prizes or money on the basis of skills or ability. Winners are determined by judging entries or ascertaining which entry comes closes to some predetermined criteria Sweepstakes/games: a promotion where winners are determined purely by chance and cannot require a proof of purchase as a condition for entry. Winners are chosen by random selection from a pool of entries or generation of a number to match those held by game entrants.

Summary of Consumer-Oriented Promotions and Market Objectives © 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin

Trade Shows Contests and Incentives Trade Allowances Point-of-Purchase Displays Sales Training Programs Cooperative Advertising Types of Trade-Oriented Promotions © 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Buying Allowances Promotional Allowances Slotting Allowances

Encourage retailers to display existing brands Obtain distribution of new products Maintain trade support for existing products Build retail inventories Trade-Oriented Sales Promotion Objectives © 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Objectives