1. Copyright © 2012 McGraw-Hill Companies, Inc., All right reversed McGraw-Hill/Irwin 16 Sales Promotion

2. A direct inducement that offers an extra value or incentive for the product to the sales force, distributors, or ultimate consumer with the primary objective of creating an immediate sale 16-2

3. Corn Flakes Premium Offer 16-3

4. Sales Promotion Vehicles Samples Coupons Premiums Contests/sweepstakes Refunds/rebates Bonus Packs Price-off deals Frequency programs Cooperative advertising Trade allowances Sales training programs Contests, incentives POP displays Trade shows Consumer-OrientedTrade-Oriented Event marketing 16-4

5. Media Often Delivers a Promotion Message Football challenge sweepstakes, referral to website 16-5

6. Reasons for Sales Promotion Increases Declining brand loyalty Increased promotional sensitivity Brand proliferation Fragmented consumer markets Short-term focus of marketers Increased accountability Competition Clutter Growing power of retailers 16-6

7. Sale Promotion Concerns Negative impact of sales promotions Fewer dollars to build brand equity Encourages consumers to purchase on the basis of price Detracts from the value of the brand 16-7

8. Consumer Franchise-Building Promotions Communicate distinctive brand attributes Build long-term brand preference Develop and reinforce brand identity “Frequency” programs promote repeat purchase Sweepstakes & contests build equity, increase involvement Promotional Objectives Techniques and Practices Premium offers that reinforce brand image & build equity 16-8

9. 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 16-9

10. Objectives of Consumer-Oriented Promotions Increase consumption of an established brand Target a specific segment Enhance IMC efforts and build brand equity Defend (maintain) current customers Obtain trial and purchase 16-10

11. Targeting Specific Consumers 16-11

12. 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 Sampling Works Best When 16-12

13. “Free Fryday” Promotion 16-13

14. Sampling Methods Door-to-door Direct mail In-store On package Events Newspaper/magazine insert Other methods Methods 16-14

15. Sampling Products are of relatively low unit value, so samples don’t cost much Products are divisible and can be broken into small sizes that reflect the products features and benefits Purchase cycle is relatively short so the consumer can soon purchase again Sampling Works Best When 16-15

16. Samples are Often Distributed With Newspapers 16-16

17. Armor All Uses On-Package Samples 16-17

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 16-18

19. Pros and Cons of Coupons AdvantagesDisadvantages Appeals to price sensitive consumers Can offer discounts without retailer cooperation Effective way to induce trial of products Defends market share and encourages repurchase Often used by loyal consumers who would purchase anyway Misredemption and fraud Hard to tell how many consumers will use them and when Low redemption rates and high costs 16-19

20. Most Often Used Coupons Disposable Diapers Cereal Laundry Soap 16-20

21. Coupon Misredemption and Fraud Customer redemption for a product or size not specified on the coupon Salesclerk redemption of coupons for cash Store managers gathering and redeeming coupons without the accompanying sale Criminals gather or print coupons and sell them to unethical merchants Web-source fraud, whereby coupons are produced and distributed online 16-21

22. Coupon Distribution In order of usage Freestanding inserts (86%) In-store couponing (6%) Direct mail (2%) Magazines (2%) Newspapers (1%) Coupons inside/outside product (1%) Other methods (2%) 16-22

23. FSIs are the Most Popular Coupon Type 16-23

24. Coupon Redemption Rates 16-24

25. Valpak Enhances Value of Coupons 16-25

26. In-Store Tear-off pads Handouts Dispensers Register printout Types of Coupons In/On-Pack Bounce-back Cross-ruff Instant 16-26

27. Cross-Ruff Coupons 16-27

28. Coupons are Available Electronically 16-28

29. 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 premium 16-29

30. Airline Miles are a Popular Incentive 16-30

31. More Consumer-Oriented Promotions Contests and sweepstakes Refunds and rebates Bonus packs Price-off Deals Loyalty programs Event marketing 16-31

32. Contests and Sweepstakes Sweepstakes Contest Promotion where winners are determined purely by chance Winners chosen by random selection from pool of entries or generation of a number to match those held by game entrants Consumers compete for prizes or money on the basis of skills or ability Winners determined by judging entries or ascertaining which entry is closest to predetermined criteria Cannot require proof of purchase as a condition for entry 16-32

33. Problems With Contests and Sweepstakes Little consumer franchise building Focus on contest/sweepstakes, not brand Effectiveness Negative publicity Federal regulations Use by professionals or hobbyists 16-33

34. Trade Oriented Promotions Maintain support for established brands Encourage display of products Build retail inventories Obtain distribution for new products Objectives 16-34

35. Types of Trade Oriented Promotions Buying Promotional Slotting POP displays Sales training Trade shows Contests and incentives Trade allowances Co-op Advertising Types 16-35

36. Cooperative Advertising Trade-oriented cooperative advertising The cost of advertising is shared by more than one party Forms Horizontal Ingredient-sponsored Vertical 16-36

37. Types of Cooperative Advertising Vertical Cooperative Advertising Ingredient- Sponsored Coop Advertising Horizontal Cooperative Advertising Cooperative Advertising 16-37

38. Promotion Agencies’ Shifting Role Directly accountable Continuing service Agency team contact Creates strategy One full-service firm Equal to ad agency Created tactics Do single project Hired for specialty Single agency contact Inferior to ad agency Indirect accountability Traditional New and Improved 16-38

39. Coordinating Sales, Advertising, IMC Tools Budget allocation Coordination of themes Media support and timing 16-39

40. Sales Promotion Abuse Over-use of sales promotions Looking for quick sales fixes Easier to drop prices than to differentiate your product Negative impact A brand that is constantly promoted may lose perceived value Purchases based on discounts, not a favorable attitude Sales promotion trap or spiral 16-40

41. The Sales Promotion Trap 16-41