1. Dr. H. Ronald Moser Cumberland University
Kleppner’s
Advertising
Procedure
Dr. H. Ronald Moser Cumberland University

2. Chapter 14 Sales Promotion
Kleppner’s
Advertising
Procedure, 18e
Lane * King * Reichart

3. Learning Objectives
Discuss the complementary roles of sales promotion and advertising.
Discuss the general forms of promotion available to marketers.
Explain the basic approaches to product association and tie-ins.
Discuss the varied types of couponing today.
Discuss the uses of sales promotion, and consumer and trade incentives.

4. Pros of Sales Promotions
Encourages consumer sales response.
Extremely flexible with a number of techniques to reach consumers across demographic and lifestyle categories.
Functions at both consumer and trade levels to encourage high levels of distribution and goodwill.
Moser’s

5. Cons of Sales Promotions
Can damage brand equity by replacing image of product with price competition.
Care must be taken to coordinate various messages.
Some forms, like couponing, do not provide a competitive source of differentiation.

6. Transaction and Relational Promotion – Promotional Categories
Experience has shown that promotion is primarily used to accomplish results across two categories that are listed below:
Transactional – Transactional promotional tactics are associated with the actual purchase of a product or service or a visit to a distributor/ retailer.
Relational – Relationship tactics are focused on the customer’s relationship with product, services, or distributor/retailer.

7. Transaction and Relational Promotion – Transaction Promotion
Value-added promotional tactics include all of the following:
Gifts with a purchase.
Percentage more free.
Free delivery.
Toys in cereal boxes.
Money back is not normally considered a value-added promotional tactic.
Delivery truck

8. Transaction and Relational Promotion – Relational Promotion
Relationship-building promotions are becoming more popular because traditional (one-way) communication has reached the point of oversaturation.
The following are stages in relational promotional strategy:
Introduction – This is when promotion is used to develop awareness for a product, service, or distributor/retailer.
Sharing – Here promotion is used to educate and involve the customer.

9. Transaction and Relational Promotion – Relational Promotion
Relationship-building promotions are becoming more popular because traditional (one-way) communication has reached the point of oversaturation.
The following are stages in relational promotional strategy:
Friendship – This is what you have (or should have) with your customers. You need to reward loyal customers and give them special attention. Having a unique dialogue with customers is another friendship tactic.

10. Transaction and Relational Promotion – Relational Promotion
Relationship-building promotions are becoming more popular because traditional (one-way) communication has reached the point of oversaturation.
The following are stages in relational promotional strategy:
Love – Love is rare and can only result when all the marketing ”P’s” are meshed in unity. Love is best communicated through an unexpected gift, or “doing good” for others.

11. Transaction and Relational Promotion – Sales Promotion
To ensure an excellent promotion marketers must create an excellent connection between the brand and the customer. Here we are coming into contact with numerous examples of Sales Promotion.
Sales Promotions – Sales activities that supplement both personal selling and marketing, coordinating the two, and helping to make them effective.

12. Little Background – Some Generalizations
By the 1960s, promotion firms were offering marketing advice to complement their promotional programs.
Promotion firms, in response to client demand, were transformed from companies developing stand-alone incentive programs to full-service marketing consultants.
To be successful, an advertiser, marketing executive, or promotion manager should have knowledge of the components of public relations, advertising, personal selling, and sales promotion. This total system is referred to under the umbrella term Marketing Communication.

13. Promotion and Advertising – Some Generalizations
Effective sales promotion has two basic functions: (1) to inform and (2) to motivate.
The following would pertain to sales promotion:
Most effective when its message is closely aligned with advertising themes.
P-O-P (Point of Purchase) displays have same spokesperson as TV commercials.
Counter displays use same headlines and copy style as print ads.
Product sampling enhances brand identification.
We need to remember that sales promotion programs, in a well-planned marketing strategy, should interact in a complementary way with advertising programs.

14. Promotion and Advertising – Some Generalizations
To be effective in sales promotion, you must remember that one basic function is to inform, while the other is to motivate.
Motivation, in a marketing sense, involves the means used to move a customer to purchase a brand.
This process usually moves across a continuum from awareness (Initially hearing about a product) to purchase.
In Exhibit 14.3., we can see that advertising and sales promotion have markedly different responsibilities in the communication and purchase process.

15. Exhibit 14.3. The Consumer Communication and Purchase Process
EXHIBIT Advertising and sales promotion should function in a complementary fashion.

16. Possible Promotional Objectives
The following would be objectives for promotion in an environment where advertising works with it to contribute to overall marketing goals:
To gain trial among non-users of a brand or service.
To increase repeat purchase and/or multiple purchases.
To expand brand usage by encouraging product uses in additional to the traditional use.
To defend share against competitors.
To support and reinforce an advertising campaign/theme or specific image.
To increase distribution and/or retailer/ dealer cooperation.
Moser’s

17. Factors to Consider When Developing Promotional Strategy
Customer Attitudes and Buying Behaviors – Establish what it is about your brand that attracts customers and how they make their buying decision.
Brand Strategy – Here we are asking the question how will sales promotion factor into performance. Here we are concerned most about level of dominance in the product category.
Competitive Strategy – Evaluate past performance, both yours and your competitors, and determine what activities, levels of spending, and time period produced the best results.
Advertising Strategy – How do you currently promote, your product in your existing markets. Which media is best?
Trade Environment – Here we are concerned most about
what competitors’ attitudes toward your brand are.
Other External Factors – What resources are available and
what unpredictable factors may influence a product’s availability or
pricing. You are concerned most about weather and raw materials.

18. Factors to Consider When Developing Promotional Strategy
Total promotion budgets are generally divided into three categories that are listed below:
Whereas coordination among these promotional classifications is important, they each serve a distinct purpose.
Let’s examine the role of each in the marketing mix and the share of promotion budgets spent in these promotional categories.
Consumer Advertising – The role of measured media advertising is to build long-term brand equity and promote basic product attributes, provide locations of dealers, and/or provide comparisons with other products.
Consumer Sale Promotion – Consumer sales promotional incentives are directed to the consumer. Cents-off coupons are the most common consumer promotion; but premiums, rebates, and sweepstakes also are used frequently.
Trade Promotions – Accounting for about half of the promotional budget, trade incentives are designed to encourage a company’s sales force or retail outlets to push their products more aggressively.

19. Forms of Sales Promotion
The remainder of this chapter discusses the primary types of sales promotion. Priority is given to those techniques most associated with advertising, especially at the consumer level.
Event Marketing.
Virtual Advertising.
Sponsorships.
Point-of-Purchase Advertising.
Premiums and Incentives.
Interactive/Digital.
Product Sampling.
Sweepstakes and Contests.
Cooperative Advertising.
Trade Shows and Exhibits.
Directories and Yellow Pages.
Trade Incentives.

20. Forms of Sales Promotion – Event Marketing
Event marketing spending is about $19.18 billion. The largest event sponsorship segment is sports, accounting for approximately $7.61 billion, followed by entertainment, road shows, and mobile marketing. The following are forms of Event Sales Marketing Promotion:
Corporate Sponsorship – One of the oldest types of advertising is the testimonial by which brand gains from an association with a celebrity through a product endorsement.
Staged Promotions – A Staged Promotion event differs from event marketing in that the sponsor not only sponsors an event but also initiates it. Concerts are among the most sponsored events of this type.
Product Licensing – Related to event marketing is the concept of commercial relationships with movies, television shows, cartoon characters, while the biggest beneficiaries are toy manufacturers.

21. Forms of Sales Promotion – Event Marketing
EXHIBIT Home Depot is a Sponsor of NASCAR and Integrates that Sponsorship in its Advertising.

22. Forms of Sales Promotion – Virtual Advertising, Sponsorship, P-O-P Advertising
Virtual Advertising – Here computer-generated advertisements, logos, and products are superimposed on a live video feed or inserted into a completed movie or television show.
Sponsorship – A few examples of sponsorship include the Super Bowl half-time show, NASCAR racing events, golf tournaments, and tennis tournaments.
Point-Of-Purchase Advertising – Using P-O-P displays offers all of the following advantages: Motivates unplanned shopping, offers brand and product reminders, influences brand switching and motivates unpredictable consumers (see Exhibit 14.6).

23. Exhibit 14.6 Forms of Sales Promotion – Point-of-Purchase Advertising
EXHIBIT This Poster Represents an Example of an In-Store Promotion.

24. Forms of Sales Promotion – Types of Premiums And Incentives
Premiums – Are items other than the product itself given to purchasers of a product as an inducement to buy. The following are major sectors of the premium industry:
Traffic-Building
Continuity
In- Or On-Pack
Self-Liquidating

25. Forms of Sales Promotion – Premiums, Traffic-Building, Continuity, In-Or On-Pack
Premiums – Items other than the product itself are given to purchasers of a product as an inducement to buy. The following are major sectors of the premium industry:
Traffic-Building Premiums – Most premiums are offered at the time of purchase.
Continuity Premiums – Continuity Premiums build in value as a consumer continues to buy a product.
In-Or On-Pack Premiums – This form of premium offers an immediate incentive and instant reward in return for a purchase.

26. Forms of Sales Promotion – Self-Liquidating Premiums
Premiums – Items other than the product itself are given to purchasers of a product as an inducement to buy. The following are major sectors of the premium industry:
Self-Liquidating Premiums – Regardless of the method of distributing the premium, the most popular type of premium is the self-liquidating offer (SLO). As the name implies, these premiums are designed to require that customers pay all or a major portion of the cost.
A primary advantage of a self-liquidating offer is customers pay a majority, it not all, costs for them.

27. Forms of Sales Promotion – Premiums And Incentives – Loyalty Incentives
Loyalty Incentives – The type of sales promotion in which points are won or earned, tracked, and redeemed for merchandise by the consumer is call Loyalty Incentives.
Loyalty has become the mantra of marketers, moving strategies far beyond the one-time purchase, the sample, or the sweeps.
Loyalty is all about getting to know those customers, earning and keeping their business, and staying in touch.
The Coca-Cola North America’s “My Coke Rewards” is Coca-Cola’s largest rewards program.

28. Forms of Sales Promotion – Interaction And Digital And Deals
Interaction and Digital – Major marketers use some form of interactive or digital promotion.
Marketers use interactive channels to build brand loyalty, prompt a sale, drive consumers to web sites, collect personal data, and offer incentives.
Deals – Deals are a catch-all category of promotional techniques designed to save the consumer money.
The most common deal is a temporary price reduction or “sale.”
The cents-off coupon is also a consumer deal because it lowers the price during some limited period.

29. Forms of Sales Promotion – Fulfillment
Fulfillment – The physical work of handling, organizing, and responding to requests for merchandise is normally managed by Fulfillment Firms.
Customer satisfaction and efficiency remain top priorities for brands and their fulfillment shops.
We are seeing that fulfillment houses are trying to take on more roles for each brand client.
Fulfillment Firms usually operate on a fee basis according to the number of requests.
Sloppy fulfillment services can virtually guarantee and unsuccessful promotion as well as long-term damage to customer goodwill.

30. Forms of Sales Promotion – Specialty Advertising
Specialty Advertising – Here we look at the major differences between premiums and specialties advertising.
(1) Advertising specialties are imprinted with the advertiser’s name, logo, or short advertising message. Premiums are not normally imprinted because the customer is being given a reward for purchasing a product.
(2) Unlike premiums, specialties are given with no obligation on the part of the recipient.
Specialties also complement other media and can be targeted to prime prospects with little waste circulation.

31. Forms of Sales Promotion – Reasons for Using Specialties
Specialty Advertising – The following items are some primary reasons for using Specialty Advertising:
To promote customer retention and appreciation
To use in connection with trade shows
To build goodwill and enhance company image
To create awareness of new products and services
To generate sales leads and responses

32. Forms of Sales Promotion – Coupons – Some Generalizations
Coupons – Among the oldest forms of sales promotion as well as the most pervasive category within the promotion industry are Coupons.
Free-Standing Inserts (FSIs) continue to lead the way marketers distribute coupons.
There are two basic approaches to coupon marketing and distribution. Traditionally, the primary marketing objectives for distributing coupons are to encourage product trial by prospective customers and to combat competitive encroachment against present customers.
Both of these goals were normally addressed through mass coupon distribution.

33. Exhibit 14.7. Forms of Sales Promotion – Coupons – FSI Delivers Coupons
EXHIBIT Folks Provides Free-Standing Insert Promotion.
Coupons are the most popular form of sales promotion.
Frees-Standing Inserts are a common form of coupon distribution.

34. Forms of Sales Promotion – Internet and Mobile Coupons – Some Generalizations
Internet and Mobile Coupons – Despite low number of coupons currently obtained online, the combination of consumer convenience and manufacturers’ ability to build customer databases makes the growth of web couponing inevitable.
Coupon Redemption Fraud – The most common type of fraud occurs when a person sends in coupons for which no product purchase has been made.
There have been instances in which criminals have obtained thousands of coupons and sent them to manufacturers using the name of supermarkets and other retailers.

35. Forms of Sales Promotion – Product Sampling
The philosophy behind sampling is that the product must sell itself.
Sampling – Is the free distribution of a product to a prospect.
In recent years, product sampling has grown significantly, and in many cases it has replaced coupons ad a manufacturer’s primary method of gaining product trial.
Experiential Sampling – Incorporates sampling with a consumer engagement device (like Hershey’s KISSMOBILE).
Moser’s of Lebanon. Home of the Bulldogs.

36. Forms of Sales Promotion – Growth in Sampling
Advertisers are increasingly using creative approaches to get samples into the hands of prospective buyers. Some of the growing areas of sampling include the following:
Newspaper Distribution – Many newspapers define their
delivery areas in small geographic areas (ZIP codes and block units).
Event/Venues Marketing – Rock concerts and sporting events
appeal to specific demographic and/or lifestyle segments. They offer
Ideal venues for sampling.
In-Store Sampling – Usually, in-store sampling is combined with
a coupon incentive encouraging immediate purchase of the product.
In-Pack/Co-Op Programs – On-pack and in-pack distribution
Is popular when one product has a natural affinity to another.
Washing machines often are delivered with a box of detergent.
Internet Sampling – Samples woo consumers online, where
they swap data for products. One study indicated that 70 percent
of consumers have completed a survey to get a sample.

37. Forms of Sales Promotion – Sweepstakes and Contests
The primary goal of most promotions is to gain immediate sales and consumer involvement.
Whether it’s a text-messaging campaign, online sweepstakes, or an interactive game, the Internet continues to dominate in the field.
The methods in which games, contests, and sweepstakes are deployed are changing to ensure a more engaging consumer experience across multiple touch points.
Traditionally, the major marketer of contests and sweepstakes include fast-food franchises.
Companies want to build ongoing relationships with consumers, and they use games and contests to obtain consumer data (see Exhibit 14.9).
Any sweepstakes that requires a purchase by an entrant is illegal and considered a lottery.

38. Forms of Sales Promotion – Sweepstakes and Contests
EXHIBIT 14.9.
PEEL TO WIN
This Game Piece Could Make A Customer A Winner Of An Automobile.

39. Forms of Sales Promotion – Cooperative Advertising – Some Generalizations
Cooperative Advertising – The following are some generalizations of Co-op Advertising:
National firm pays 50 percent of cost for most co-op advertising; some at 100 percent.
National manufacturers build goodwill with retailers; encourage local support of brands; and qualify for lower local rates, especially in newspapers.
Manufacturers also gain a positive association between local retailers and their products and enhance brand equity.

40. Forms of Sales Promotion – Cooperative Advertising
Primary purpose of Cooperative Advertising includes all of the following:
It benefit retailers by helping them stretch their
advertising budget.
It allows national manufacturers to build goodwill
with retailer.
To qualify national manufacturers for local
advertising rates, especially in newspapers.
To build a better relationship with a media that
strongly support the concept. The media are
among the strongest supports of co-op advertising.

41. Forms of Sales Promotion – Types of Cooperative Advertising
Vendor Programs – A special form of co-op normally used by large retailers is the Vendor Program.
The primary difference between Vendor Programs and other forms of co-op is that they are initiated by retailers.
In Vendor Programs, manufacturers are approached by retailers to pay all or a share of the program.
Moser’s

42. Forms of Sales Promotion – Types of Cooperative Advertising
Ingredient Manufacturer CO-OP – Most co-op programs are set up between manufacturers and retailers.
Your company provides a component for another company’s end product. If you want to bring attention to your role in the manufacturing of the product, you can participate in the Ingredient Manufacturer Co-Op program.

43. Forms of Sales Promotion – Types of Cooperative Advertising
Manufacturer-To-Wholesaler CO-OP – Occasionally, distribution in an industry is dominated by a relatively few wholesale outlets, and manufacturers have little direct relationship with retailers.
In this situation, it often is worthwhile for manufacturers to allocate co-op dollars to wholesalers that then make co-op arrangements with individual retailers.

44. Forms of Sales Promotion – Types of Cooperative Advertising
Controlling CO-OP Dollars – Despite attempts to improve the process, expenditures of co-op dollars still are allocated improperly out of neglect or inexperience by retailers. In a few cases, there is evidence of outright fraud. Co-op fraud usually takes one of two forms. In the first, retailers bill manufactures for advertisements that never ran, using fake invoices and tear sheets. The second type of fraud, called double billing, occurs when manufacturers are overcharged for the cost of advertising.
Basically, retailers pay one price to the medium and bill the manufacturer for a higher price using a phony (double) bill.

45. Forms of Sales Promotion – Trade Shows And Exhibits – Some Generalizations
Trade Shows And Exhibits – The following are characteristics of Trade Shows:
In a typical year, almost 100 million people will attend them.
Trade Shows are prime example of an integrated promotion. They combine a number of media and other forms of marketing communication.
Trade Shows provide fulfillment of a number of objectives from product introduction to direct selling.
Create opportunities for on-site market research.
Trade Incentives are a category of sale promotion that include incentives directed to wholesalers, retailers, sales people and employees (see Exhibit 14.10).

46. Forms of Sales Promotion – Trade Shows
There are all types of trade shows!
EXHIBIT
There Are All Types of Trade Shows and Exhibits, Even for Nonprofit Promotional Events.

47. “I love that good old country music.”
Forms of Sales Promotion – Directories And Yellow Pages – Some Generalizations
Directories And Yellow Pages – At one time there was a single Yellow Page provider in each town.
This made it simple for retailers to buy advertising in the Yellow Pages and for consumers to use them.
Now the Yellow Pages is being attacked on all sides by the explosion of web-based information and directories.
According to research, 76 percent of all U.S. adults refer to the Yellow Pages monthly, and 88 percent of those who use Yellow Pages ultimately make or are likely to make a purchase.
Moser’s
“I love that good old country music.”

48. Forms of Sales Promotion – Forms of Trade Incentives
Although the average consumer is not familiar with trade promotions, businesses will spend some $25 billion in promotions to reach wholesalers, retailers, and company sales personnel.
Incentives include everything form cash bonuses to travel offers, with various types of merchandise (clothing leads the list) being the most popular type of incentive. There are two types of incentives:
Dealer Incentive – This type of incentive is directed to retailers and wholesalers.
Sales Incentives – This type of incentive is directed to a company’s sales force.
The primary objective of incentives are to motivate either members of the distribution channel or company reps to achieve higher sales and profitability.

49. The End! THEY WILL BE THERE! WHAT ABOUT THOSE REVIEW QUESTIONS?
“S” DRIVE