13-1 Copyright © 2009 Pearson Education Canada CHAPTER 13 Sales Promotion

13-2 Copyright © 2009 Pearson Education Canada Learning Objectives  Identify the roles of various consumer and trade promotion activities in the marketing communications process  Outline the nature of various consumer and trade promotion activities  Assess the strategies for integrating sales promotions into the marketing communications mix

13-3 Copyright © 2009 Pearson Education Canada  Activity that provides special incentives to bring about immediate response from:  Consumers,  Distributors,  Organization’s sales force. Sales Promotion

13-4 Copyright © 2009 Pearson Education Canada Sales Promotion Can be subdivided into 2 broad categories: 1. Consumer promotions  Designed to stimulate purchases by consumers (ultimate users)  Help pull the product through the distribution channels  focus on achieving trail purchase and repeat multiple purchases and building brand loyalty. 2. Trade Promotions  Designed to encourage distributors to purchase more additional volume and provide encouraging merchandise support to stimulate consumer purchase.  Help push the product through the distribution channels

13-5 Copyright © 2009 Pearson Education Canada Sales Promotion Planning  In today’s environment, where planners consider an integrated marketing approach, sales promotions are not viewed as separate entities  Sales Promotions are planed at the same time to ensure that synergies are achieved across all forms of communications.  Promotion activity must complement the total marketing effort.

13-6 Copyright © 2009 Pearson Education Canada Sales Promotion Objectives Objectives of consumer promotions focus on achieving:  Trial purchase  Repeat or multiple purchases  Building brand loyalty Objectives of trade promotions focus on:  Selling more volume of merchandise  Encouraging merchandising support among channel members that buy and resell products.

13-7 Copyright © 2009 Pearson Education Canada Pull Marketer Consumer Wholesaler Retailer Marketer Consumer Wholesaler Retailer Promotion Strategy Push

13-8 Copyright © 2009 Pearson Education Canada Consumer Promotion – Pull Strategy Pulls the product through the channel Marketer Distributors Consumers Objectives:  Trial purchase  Brand loyalty  Multiple purchase

13-9 Copyright © 2009 Pearson Education Canada  Coupons  Free Samples  Contests  Cash Refunds  Premium Offers  Loyalty (Frequent- Buyer) Programs  Delayed Payment Incentives  Combination Offers Types of Consumer Promotion Activity

13-10 Copyright © 2009 Pearson Education Canada Coupon Distribution

13-11 Copyright © 2009 Pearson Education Canada Objectives of Coupon Programs  Non-brand users to make trail purchase  Maintain current users  Speed up acceptance of a new product  Encourage current customers to repurchase the brand (build loyalty)  Attract users of competitive brands  Encourage multiple purchases  Increase seasonal sales

13-12 Copyright © 2009 Pearson Education Canada Coupons can be delivered to consumers in four different ways, by:  Product  Media  In-Store at the point-of-purchase  Electronically Methods of Coupon Distribution

13-13 Copyright © 2009 Pearson Education Canada Average Redemption Rates by Method of Delivery

13-14 Copyright © 2009 Pearson Education Canada Free product distributed to potential users in a trial or regular size, effective for achieving trial purchase.  In-store samples most common, plus:  Cross-sampling  Co-operative direct mail  Event sampling  Sample packs Free Samples

13-15 Copyright © 2009 Pearson Education Canada Contests are designed and implemented to create temporary excitement about a product.  Sweepstakes  Games / Instant Wins  Successful contests have significant media advertising support. Contests

13-16 Copyright © 2009 Pearson Education Canada Money returned directly to the consumer by the manufacturer after the purchase has been made.  Reinforce loyalty and multiple purchases  Slippage commonly occurs  Successful refund offers require strong P-O-P support Cash Refunds (Rebates)

13-17 Copyright © 2009 Pearson Education Canada An item offered free or at a bargain price to encourage consumers to buy a specific product. It is usually offered three ways. 1.Mail-in 2.In/On Pack 3.Coupon Offer at P-O-P Premium Offers

13-18 Copyright © 2009 Pearson Education Canada A frequent buyer program offers consumers a bonus, such as points or “play money.”  Canadian Tire Money  Club Z at Zellers and Bay  Shoppers Drug Mart’s Optimum Card  The goal is to encourage loyalty through repeat purchases. Loyalty (Frequent-Buyer) Programs

13-19 Copyright © 2009 Pearson Education Canada Delayed Payment Incentives Consumers are granted a grace period during which he or she pays no interest or principal for the item purchased.  Leon’s “Don’t Pay a Cent Event”  Home Depot  For renovations and household repairs, they offer six-month and one-year interest-free financing packages  This gives them a competitive edge over independent contractors who demand payment when jobs are completed.

13-20 Copyright © 2009 Pearson Education Canada Pushes the product through the channel Consumers Marketer Distributors Objectives:  Secure listings  Build sales volume  Secure merchandising support Trade Promotion – Push Strategy

13-21 Copyright © 2009 Pearson Education Canada  Trade Allowance  Performance Allowance  Co-operative Advertising Allowance Continued… Trade Promotion Planning Three basic objectives: secure a listing, build volume, and encourage merchandise support.

13-22 Copyright © 2009 Pearson Education Canada  Retail In-Ad Coupons  Dealer Premiums  Collateral Material  Dealer Display Material (P-O-P)  Trade Shows  Branded Promotion Merchandise Trade Promotion Planning (cont.)

13-23 Copyright © 2009 Pearson Education Canada In the packaged goods market there has been a steady shift toward trade promotion, largely due to:  Media Fragmentation  Demand for accountability  Buying-Power Concentration Trends in Sales Promotion Planning

13-24 Copyright © 2009 Pearson Education Canada Promotion strategies must be integrated with other marketing communications activities. Strategic decisions must consider:  Frequency of Promotion Activity  Promotion/Product Relationships  Creative Strategy  Media Strategy Sales Promotion Integration with Marketing Communications