Sales Promotion

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 “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.”

Types of Sales Promotion Activities Samples Coupons Premiums Contests/sweepstakes Refunds/rebates Bonus Packs Price-off Deals Frequency Programs Cooperative Advertising Trade Allowances Training Programs Contests, Dealer Incentives Point-of-purchase Displays Trade Shows Event Marketing Samples Coupons Premiums Contests/sweepstakes Refunds/rebates Bonus Packs Price-off Deals Frequency Programs Trade Allowances Training Programs Contests, Dealer Incentives Point-of-purchase Displays Trade Shows Event Marketing Consumer-OrientedTrade-Oriented

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.

Reasons for the Growth of Sales Promotion Short-Term Focus Fragmentation of the Consumer Market Brand Proliferation Increased Promotional Sensitivity Declining Brand Loyalty Growing Power of Retailers Strategic Importance of Sales Promotion Reaching a Specific Target Audience Reasons Increased Accountability Competition Clutter

Objectives of Consumer Sales Promotion To Defend (Maintain) Current Customers To Increase Consumption of an Established Brand To Obtain Trial and Purchase Objectives To Enhance IMC Efforts and Build Brand Equity

Consumer Sales Promotion Strategy Decisions Three categories of strategic decisions for sales promotion: 1. Strategic tools/options 2. Application across product lines 3. Application in geographic markets

1. Strategic Tools/Options Communicate Distinctive Brand Attributes Build Long-term Brand Preference Develop and Reinforce Brand Identity “Frequency” Programs Encourage Repeat Purchase “Frequency” Programs Encourage Patronage Loyalty “Frequency” Programs Encourage Repeat Purchase Build Long-term Brand Preference Develop and Reinforce Brand Identity Communicate Distinctive Brand Attributes Franchise Building Promotional Objectives Franchise Building Techniques and Practices May Improve One- on-one Communications

WD-40 Brand Building Sweepstakes

1. Strategic Tools/Options Figure 13-2

2. Application Across Product Lines Across the entire line or on individual items? If individual items, which ones? More or less popular? Higher or lower price points? Regular stock or special version?

3. Application Across Geographic Markets Sales promotion  Nationally or in select markets.

Consumer Sales Promotion Tactical Decisions Distribution Timing Value of Incentive Execution

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

Strengths and Limitations of Sampling StrengthsLimitations Induce prospective buyer to try product or service Greater consumer appreciation of product benefits Learning period required to appreciate brand requires large sample size Brand must have unique benefit to induce repeat purchases Induce prospective buyer to try product or service Greater consumer appreciation of product benefits Brand must have unique benefit to induce repeat purchases

Sampling Methods Location Sampling Door-to-door Sampling Sampling through Media Sampling through Mail In-store Sampling On-product Sampling Event Sampling Direct Sampling The Internet Location Sampling Direct Sampling Event Sampling On-product Sampling In-store Sampling Sampling through Mail Sampling through Media Door-to-door Sampling Methods

Armor All Uses an On-Package Sample

Coupons 85% of Canadians used coupons last year Canadians use about 8 coupons per person 1/3 of all Canadians used coupons in the past week in 2003 Over half of all Canadian households claim coupons influence their brand purchase decisions

Strengths and Limitations of Coupons Appeal to Price Sensitive Consumer Can Offer Price Break Without Retailers Coop Can Be Effective Way to Induce Trial of New or Existing Products Can Be Way to Defend Market Share and Encourage Repurchase Coupons Are Often Used by Loyal Consumers Who May Purchase Anyway Improper Redemption and Fraud Difficult to Determine How Many Consumers Will Use Coupons and When Declining Redemption Rates and High Costs of Couponing Appeal to Price Sensitive Consumer Can Offer Price Break Without Retailers Coop Can Be Effective Way to Induce Trial of New or Existing Products Can Be Way to Defend Market Share and Encourage Repurchase Coupons Are Often Used by Loyal Consumers Who May Purchase Anyway Difficult to Determine How Many Consumers Will Use Coupons and When Declining Redemption Rates and High Costs of Couponing StrengthsLimitations

Coupon Distribution Across All Media (2003) Data from Figure 13-7

Valpak’s Advertising Helps Enhance the Value of Coupons

Coupons Are Now Available Online

Premiums 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 Two Types of Premiums

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. Contests and Sweepstakes

Refunds and Rebates Refunds: Offers by the manufacturer to return a portion of the product purchase price, usually after the consumer supplies some proof of purchase.

Strengths and Limitations of Refunds and Rebates Create New Users Brand Switching or Repeat Purchases Temporary Price Reduction Effort to Obtain Refund Delay in Obtaining Refund Image of Refunds/Rebates Create New Users Brand Switching or Repeat Purchases Temporary Price Reduction Effort to Obtain Refund Delay in Obtaining Refund StrengthsLimitations Slippage

Other Sales Promotion Tools Frequency/ Loyalty Programs Price-off Deals Bonus Packs Other Promotional Tools Event Marketing

Gerber Developed a Sweepstakes in Conjunction with a Loyalty Program

Bonus Packs Extra amount of product at regular price by providing larger containers or extra units.

Objectives of Trade Sales Promotion Encourage Retailers to Display Existing Brands Obtain Distribution of New Products Maintain Trade Support for Existing Products Build Retail Inventories Maintain Trade Support for Existing Products Obtain Distribution of New Products Objectives

Trade Sales Promotion Strategy Options Trade Shows Contests and Incentives Trade Allowances Point-of-Purchase Displays Sales Training Programs Cooperative Advertising Buying Allowances Promotional Allowances Slotting Allowances Events

Chicken of the Sea Targets the Trade with this Collateral Piece

The Sales Promotion Trap Figure 13-10