ADVERTISING: Sales Promotion

Sales Promotion A special incentive to: –Distributors –Salespeople, or –Customers to encourage an immediate sale

Growth of Sales Promotion 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% '89‘90‘91‘92'93'94'95'96'97'98'99‘00 Consumer Promotions Media Advertising Trade Promotions Percent of Total Promotional Dollars, 3-year Moving Average.

Consumer Promotions Use

Franchise Building –LONG TERM preferences –Communicate distinctive brand identity –Example: “Frequency” programs with brand or store image Non-Franchise Building –IMMEDIATE sales –Examples: Price-off deals Bonus packs Rebates or refunds Types of Promotions

Obtaining trials Increasing repurchase Increasing overall consumption Rewarding current customers Reaching out to a new market Enhancing advertising efforts Objectives of Sales Promotions

Sales Promotion Vehicles Consumer-Oriented “Pull” Samples Coupons Premiums Contests/sweepstakes Refunds/rebates Bonus packs Price-offs Event sponsorship Trade-Oriented “Push” Contests, dealer incentives Trade allowances Point-of-purchase displays Dealer premiums Trade shows Cooperative advertising

Sampling 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 Works Best When

Samples -- Media Door-to-door Direct mail In-store sample pack Cross-product sampling Co-op package distribution With newspaper / magazine Any of above with coupon

Display Cards

Coupons Advantage Works – will increase sales Disadvantages May be redeemed by loyal users who would buy anyway Sometimes difficult to estimate redemption levels in advance Expensive

43% 35% 29% 25% 24% 20% 12% 11% 8% 7% 2%Gum Candy Carbonated Beverages Adult Cold Remedies Pet Food Coffee Sanitary Protection Deodorants Liquid Detergents Ready-to-Eat Cereal Disposable Diapers Percent of Sales with Coupons

ADVANTAGES: Gets consumer involved with the product Generates interest and attracts attention to advertising DISADVANTAGES May overshadow the product May detract from brand image Sweepstakes and Contests

Spending on Event Sponsorship

Benefits of Event Marketing 1. Greater Awareness 2. Associate Product with Event 3. New Potential Clients (Sales) 4. Media Coverage

Competition Continue Promotions Continue Promotions Reduce Promotions Reduce Promotions Our Firm Lose market share low profits Maintain share low profits Higher profits for everyone! Gain market share But low profits The Sales Promotion Trap

Quote of the day If you’re selling an inexpensive product that is purchased regularly, and it’s really great, just give away free samples. Mike Basil Professor of Marketing