0. MKTG 303: Advertising and Promotion Sales Promotions December 17, 2009 Zeynep Gürhan-Canlı

1. Planning Consumer Promotions
Types of consumers
Promotion prone
Brand loyal
Price sensitive
Retailer incentives
Increase store traffic
Increase store sales
Attract new customers
Increase basket size
IMC Plan

2. Consumer Promotions Coupons Premiums Contests and sweepstakes
Refunds and rebates
Sampling
Bonus packs
Price-offs

3. Types of Coupons Instant redemption (versus bounce back)
Scanner-delivered
Cross-ruffing
Response offer
Face value of coupon,distribution method, and coupon for preferred brand or brand in evoked set determine their effectiveness.
Problems: Reduced revenue, counterfeiting, illegal internet distribution, misredemption

4. Types of Premiums Free-in-the-mail In- or on-package
Store or manufacturer
Self-liquidating
Time factor
Tend to have short life spans
Popularity important
Cost
Related to interest in premium
Exclusive premiums

5. Keys to Successful Premiums
Match premium to target market
Carefully select premiums
Pick premium that reinforces product and firm image
Integrate premium with other IMC components
Don’t use premiums to increase profits

6. Contests and Sweepstakes
Require skill
Sweepstakes
Random chance
Rewards
Extrinsic
Intrinsic
Costs
Consumer indifference
Clutter

7. Creating Successful Contests and Sweepstakes
Know legal restrictions.
Find right prizes.
Consider extrinsic and intrinsic value.
Use special events and tie-ins.
Use Internet.
Coordinate with POP displays and other marketing tools.

8. Rebates and Refunds Rebates – hard goods Refunds – soft goods
Redemption rates
30% overall
65% for rebates over $50

9. Rebates and Refunds Problems Creating effective programs Costs
Paperwork
Diminished effectiveness
Creating effective programs
Visibility
Perceived newness
Impact

10. Types of Sampling In-store distribution Direct sampling
Response sampling
Cross-ruff sampling
Media sampling
Professional samples
Selective samples

11. Sampling Programs Problems Effective sampling Costs Distribution
Component of IMC Plan
Stimulate trial usage
Target audience

12. Bonus Packs Increase usage of product Match or preempt competition
Stockpiling of product
Develop customer loyalty
Attract new users & encourage brand switching??
Bonus range from 30% to 100%
30% bonus most common

13. Price-offs Temporary price reduction Stimulate sales
Reduce financial risk
Brand switching
Use of by
Manufacturers
Retailers

14. Problems with Price-offs
Increase sales, but not profits.
20% or more increase in sales is needed to offset 5% price reduction.
Makes consumers more price sensitive.
25% of consumers base purchases on price.
Competitive pressure to use.

15. Effective Price-offs Increase store traffic Generate sales
Works best with higher margin items
Reasons for success
Consumers view as monetary savings
Reward is immediate

16. Promotion Combinations
Over-lay: Two or more consumer promotion activities in one campaign
Intra-company tie-in: Promotion of two different products within one company
Inter-company tie-in: Partnering with another company

17. Trade Promotions
Expenditures or incentives to push products through the channel (up to 70% of marketing budgets).

18. Objectives of Trade Promotions
Obtain initial distribution
Obtain retail shelf space
Maintain established brands
Counter competitive actions
Increase order size
Build retail inventories
Reduce excess inventories
Enhance channel relationships

19. Trade Promotion Tools Trade allowances Trade contests Trade incentives
Training programs
Vendor support programs
Trade shows
Specialty advertising
Point-of-purchase displays

20. Trade Allowances Off-invoice allowance Slotting fees Exit fees
Approximately 35% of all trade promotions
Slotting fees
To add new products to inventories and to stock merchandise.
Shelf space
To finalize decisions
Add to the bottom line
Exit fees
Assumption is that a portion of this reduction will be passed on to consumers
Forward buying
Diversion

21. Trade Contests & Incentives
Trade contests: To distribution channels, stores, sales people
Trade incentives involve the retailer to perform a function to receive the allowance.
Cooperative merchandise agreement (CMA) is an example.

22. Training Programs & Trade Shows
Training programs are provided by manufacturers
Goal is to bias salespeople
Provide knowledge
Trade shows are used extensively in business-to-business marketing programs

23. Concerns of Trade Promotions
High costs
Tend to use outside of IMC Plan
Over-reliance on trade promotions
Used for short-term sales goals
Erosion of brand image
Impact on small manufacturers