1. Chapter 16
Sales Promotion

2. Sales Promotion An extra incentive to buy
“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.”
An extra incentive to buy
An inducement to intermediaries
Targeted to different parties

3. Sales Promotion Vehicles
Consumer-Oriented
Trade-Oriented
Samples
Contests, dealer incentives
Coupons
Trade allowances
Premiums
Point-of-purchase displays
Contests/sweepstakes
Trading programs
Refunds/rebates
Trade shows
Bonus packs
Cooperative advertising
Price-offs
Event sponsorship

4. Consumer Promotions Media Advertising Trade Promotions
Long-Term Allocations to Advertising, Trade Promotions and Consumer Promotions
100%
Consumer Promotions
90%
80%
70%
Media Advertising
60%
50%
40%
30%
Trade Promotions
20%
10% 0%
'86
'87
'88
'89
'90
'91
'92
'93
'94
'95
'96
'97
Percent of total promotional dollars, 3-year moving average.

5. Reasons for Increase in Sales Promotion
Growing Power of Retailers
Declining Brand Loyalty
Increased Promotional Sensitivity
Brand Proliferation
Fragmentation of Consumer Markets
Short-Term Focus
Increased Accountability
Competition
Clutter

6. Sales Promotion Uses Introduce new products
Get existing customers to buy more
Attract new customers
Combat competition
Maintain sales in off season
Increase retail inventories
Tie in advertising and personal selling
Enhance personal selling efforts

7. Consumer Franchise-Building (CFB) Promotions
CFB Promotional Objectives
Communicate distinctive brand attributes
Develop and reinforce brand identity
Build long-term brand preference
CFB Techniques and Practices
“Frequency” programs encourage repeat purchase
“Frequency” programs encourage patronage loyalty
Offers consistent with brand or store image . . .
Reinforce brand or store identity
Define store or brand “personality”
Reveal brand or service attributes or benefits
Engage participants though active involvement

8. Nonfranchise-Building (non-FB) Promotions
Non-FB Promotional Objectives
Accelerate the purchase decision process
Generate an immediate sales increase
Non-FB Promotions . . .
Do not identify unique brand features
Do not contribute to brand identity or image
Non-FB Promotions may include . . .
Price-off deals
Bonus packs
Rebates or refunds
Non-FB Promotions shortcomings
Trade promotions benefits may not reach customers
If they do, they may lead only to price reductions
Customers may “buy price” rather than brand equity

9. Objectives of Consumer-Oriented Sales Promotion
To Obtain Trial and Purchase
To Increase Consumption of an Established Brand
To Defend (Maintain) Current Customers
To Target a Specific Segment

10. Percentage of Promotions Vehicles Used by Package Goods Manufacturers, 19970%
25%
50%
75%
100%
Money back offers/other refunds
Couponing consumer direct
Cents-off promotions
Couponing in retailers' ads
Couponing in store
Sampling new products
Sampling established products
Premium offers
Electronic retail promotions
Sweepstakes
Internet promotions
Contests
Prepricing on package
Other

11. Percentage of Promotions Vehicles Used by Package Goods Manufacturers, 19970%
25%
50%
75%
100%
Money back offers/other refunds
Couponing consumer direct
Cents-off promotions
Couponing in retailers' ads
Couponing in store
Sampling new products
Sampling established products
Premium offers
Electronic retail promotions
Sweepstakes
Internet promotions
Contests
Prepricing on package
Other

12. Eight Sampling Media Door-to-door Direct mail Central location
In-store sample pack
Cross-product sampling
Co-op package distribution
With newspaper / magazine
Any of above with coupon

13. Coupon Distribution Other Magazines In / On Pack Direct Mail
Newspaper Coop
Newspaper ROP
Freestanding

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

15. Coupon Fraud Consumers redeem without purchase
Clerks and staff exchange for cash
Managers/owners redeem without sale
Criminals collect or counterfeit and sell

16. Trade-Oriented Sales Promo Objectives
Obtain Distribution of New Products
Maintain Trade Support for Existing Products
Encourage Retailers to Display Existing Brands
Build Retail Inventories

17. Types of Trade-Oriented Promotions
Contests and Incentives
Trade Allowances
Buying Allowances
Promotional Allowances
Slotting Allowances
Point-of-Purchase Displays
Sales Training Programs
Trade Shows
Cooperative Advertising

18. Sales Promotion Agencies
THEN
Created tactics
Do single project
Hired for specialty
Single agency contact
Inferior to ad agency
Indirect accountability
NOW
Creates strategy
Continuing service
One full-service firm
Agency team contact
Equal to ad agency
Directly accountable

19. The Sales Promotion Dilemma
Our Firm
Cut Back
Promotions
Maintain
Promotions
We loose
market share
Same market share, profits stay low
Maintain
Promotions
All Others
Higher profits
for everyone
We gain in
market share
Cut Back
Promotions

20. Promotion Targeted to Reseller Salespeople
Product or program sales e.g
Selling a specific number of cases
Selling a specific number of units
Selling a specific number of promotional programs
New account placements e.g
Number of new accounts opened
Number of new accounts ordering a minimum amount
Promotional programs placed in new accounts
Merchandising Efforts e.g
Establishing promotional programs
Placing display racks, counter displays, etc.

21. Shifting Role of the Promotion Agency
Traditional
New and Improved
1. Primarily used to develop short-term tactics or concepts
1. Used to develop long- and short-term promotional strategies as well as tactics
2. Hired/compensated on a project-by-project basis
2. Contracted on annual retainer following formal agency reviews
3. Many promotion agencies used a mix—each one hired for best task and/or specialty
3. One or two exclusive promotion agencies for each division or brand group
4. One or two contact people from agency
4. Full team or core group on the account
5. Promotion agency never equal to ad agency—doesn’t work up front in annual planning process
5. Promotion agency works on equal basis with ad agency—sits at planning table up front
6. Not directly accountable for results
6. Very much accountable—goes through a rigorous evaluation process