1. Sales PromotionPromotion Sales PromotionPromotion 16 McGraw-Hill/Irwin Copyright © 2009 by The McGraw-Hill Companies, Inc. All rights reserved.

2. Sales Promotion An extra incentive to buy A tool to speed up salesto A tool to speed up salesto 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.”

3. Sales Promotion Vehicles Samples Coupons Premiums Contests/sweepstakes Refunds/rebates Bonus Packs Price-off deals Frequency programs Cooperative advertising Trade allowances Training programs Contests, incentives Point-of-purchase displays Trade shows Consumer-Oriented Trade-Oriented Event marketing

4. Consumer promotion $350 Billion Trade promotion $150 Billion 60 to 75% of budget on sales promotion Trade promotion 50% of package goods 27% to consumer promotion

5. San Diego Padres Boost Attendance *Click outside of the video screen to advance to the next slide

6. Long-Term Budget Allocations 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% ‘94‘95‘96‘97'98‘99‘00‘01‘02‘03‘04‘05 Consumer Promotions Media Advertising Trade Promotions % of Total Promotional Dollars, 3-yr Moving Average

7. Media Often Delivers a Promotion Message

8. Sales Promotion Increases Declining brand loyalty Increased promotional sensitivity Brand proliferation Fragmentation of consumer markets Short-term focus of marketers Increased accountability Competition Clutter Reasons Growing power of retailers

9. Consumer Franchise-Building Promotions Communicate distinctive brand attributes BuildBuild long-term brand preference BuildBuild long-term brand preference Develop and reinforce brand identity “Frequency” programs encourage repeat purchase Sweepstakes & contests to build equity, increase involvement Promotional ObjectivesObjectives Promotional ObjectivesObjectives Techniques and Practices Premium offers that reinforce the brand image and help build equity

10. Nonfranchise-Building Promotions Accelerate the purchase decision process Generate an immediate sales increase Objectives Do not identify unique brand features Do not contribute to brand identity or image Limitations

11. Contests Can Build Brand Equity

12. Nonfranchise-Building Promotions Price-off deals Rebates or refunds Bonus packs May Include... 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

13. Objectives of Consumer-Oriented Promotions To increase consumption of an established brand To target a specific segment Enhance IMC efforts and build brand equity To defend (maintain) current customers To obtain trial and purchase Objectives

14. Sampling The products are of relatively low unit value The product can be broken into a small piece or size that reflects the full features and benefits The purchase cycle is relatively short SamplingSampling Works Best When SamplingSampling Works Best When

15. Sampling Methods Door-to-door Direct mail In-store On package Event Newspaper/magazine insert Internet sites Methods

16. Distributing Samples With Newspapers

17. Armor All Uses On-Package Samples

18. Couponing Nearly 240 billion distributed each year in the US The oldest and most widely used sales promotion tool 85% of consumers use coupons; 21% use them regularly

19. Pros and Cons of Coupons AdvantagesDisadvantages Appeals to price sensitive consumer Can offer price break without retailers co-op Effective way to induce trial of products Can be way to defend market share and encourage repurchase Often used by loyal consumers who may purchase anyway Misredemption and fraud Hard to tell how many consumers use them and when Declining redemption rates and high costs of couponing

20. Coupons are Most Often Used With… Disposable Diapers Cereal Laundry Soap

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

22. The Most Popular Coupons are FSIs

23. Coupon Redemption Rates

24. Valpak Enhances Value of Coupons

25. Types of Coupons In/on-pack Bounce-back Cross-ruff Instant Tear-off pads In-store Handouts Dispensers Register printout

26. Coupons are Available Electronically

27. Premiums An offer of an item, merchandise, or service, free or at a low cost, that is an extra incentive for customers Types of Premiums Free: Only requires purchase of the product Self-liquidating: consumer required to pay some or all of the cost of the premiumliquidating Self-liquidating: consumer required to pay some or all of the cost of the premiumliquidating

28. Airline Miles are a Popular Incentive

29. More Consumer-Oriented Promotions ContestsContests and sweepstakes ContestsContests and sweepstakes Refunds and rebates Bonus packs Price-off Deals Loyalty programs Event marketingmarketing Event marketingmarketing

30. Trade Oriented Promotions Maintain support for established brands Encourage display of products Build retail inventories Obtain distribution for new products Objectives

31. Types of Trade Oriented Promotions Buying Promotional Slotting POP displays Sales training Trade shows Contests and incentives Trade allowances Co-op Advertising Types

32. Coordinating Sales, Advertising, IMC Tools Budget allocation Coordination of themes Media support and timing

33. Problems With Sales Promotion

34. Aspects of Consumer Promotions Economic Informative Affective