Chapter 16 Sales promotion

Chapter 16 Sales promotion
Chapter One An Introduction to Integrated Marketing Communications Chapter 16 Sales promotion Title page—chapter 16 © 2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin

Learning objectives To understand the role of sales promotion in a company’s integrated marketing communication program and to examine why it is increasingly important. To examine the various objectives of sales promotion programs. To examine the types of consumer- and trade- oriented sales promotion tools and the factors to consider in using them. To consider potential problems and abuse by companies in their use of sales promotion. Relation to text This slide sets out the chapter’s learning objectives on p. 534 of the text.

Sales promotion Sales Scope and role promotion abuse Objectives
Trade-oriented sales promotion Sales promotion Growth of sales promotion Relation to text This slide presents a mind map of the key topics/concepts covered in Chapter 16 as shown on p. 534. Use of this slide This slide is an introductory/ transition slide. Techniques Consumer-oriented sales promotion Objectives Techniques

Australia’s national dish
Relation to text This slide relates to the material on pp. 535–536 of the text and the opening vignette. Summary overview This slide shows an image from Four’N Twenty Pies Magic Plate campaign. The opening vignette details the challenges facing the pie manufacturer as Australian men deserted the pie category in favour of healthier meal choices. Four’N Twenty were faced with a choice: change their product–– many food retailers had reinvented their offerings to make them a healthy choice stay true to the brand and celebrate all the meat pie stood for. The company chose the latter. Campaign objectives: 1. Drive dollar sales of single serve pies across Retail and Foodservice by 8% and 10%. 2. Reinforce Four’N Twenty’s status as champion of the Aussie bloke’s hunger. 3. Create noise and talkability for the brand so that it would punch beyond its weight. Budget: $1.2 million Media: TV, Radio, POP with sales promotion support To achieve these objectives, they needed more than a television commercial. They needed a bit of magic. Enter the ‘magic salad plate’, where a side salad was actually printed into the side of a plate. By placing their meat pie in the centre, Aussie blokes could look like they were eating healthy with a salad alongside their meat pie. The sales promotion was described as, ‘A good humoured joke from a brand that doesn’t take itself, nor the conventions and pressures of society too seriously, just like our core Aussie bloke audience’. It used television to demonstrate the plate; radio to remind hungry Aussie blokes; and point-of-purchase wobblers and decals to cry ‘pick me!’ The most important channel, however, was the pack, which was redesigned to become a coupon with a unique code that had to be collected. To redeem the premium, participants went to www. magicsaladplate.com, entered the code from two packs, Australia’s national dish gets a new plate. Use of this slide This slide can be used to demonstrate how marketers often use sales promotion to generate excitement and immediacy surrounding a campaign.

Sales promotion An extra incentive to buy A tool to speed up sales
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. Relation to text This slide relates to material on p. 536 of the text and provides a definition of sales promotion. Summary overview Sales promotion is an inducement or incentive to the sales force, distributors, or ultimate customer with the primary objective of creating immediate sales. There are three important aspects of sales promotion: extra incentive to buy—coupons, rebates, premium provide extra reason to buy tool to speed up sales—acceleration tool designed to shorten the purchase cycle targeted to different parties—can be targeted to consumers or to the trade. Use of this slide This slide can be used to introduce sales promotion and its role in the overall IMC program. Attention should be given to these three important aspects of sales promotion. An extra incentive to buy Targeted to different parties A tool to speed up sales

Scope of sales promotion
Sales promotion can be targeted at… Retailers Trade-oriented sales promotion Consumers Consumer-oriented sales promotion Relation to text This slide relates to material on pp. 536–7 of the text which discusses the scope of sales promotion. Summary overview Sales promotion can be targeted at: Customers—incentive to buy—coupons, rebates, premiums provide extra reason to buy (used extensively with pull distribution strategies) trade—essentially as an acceleration device, designed to speed up the selling process and maximise sales volume (used extensively with push distribution strategies). Use of this slide This slide can be used to discuss the scope of sales promotion and its role in the overall IMC program. Attention should be given to these different aims and objective of trade- vs consumer-oriented sales promotion.

Sales promotion vehicles
Consumer-oriented Trade-oriented Samples Contests, dealer incentives Coupons Trade allowances Premiums Point-of-purchase displays Contests/sweepstakes Relation to text This slide relates to material on pp. 537–38 of the text and Figure 15.1. Summary overview Sales promotion can be broken into two major categories, consumer-oriented promotion and trade-oriented promotion. This slide shows the various types of activities of each. Use of this slide This slide can be used to show the various tools that can be used for consumer- and trade-oriented promotions. Consumer-oriented promotions are generally used as part of a push channel strategy while trade-oriented promotions are part of a pull strategy. Training programs Refunds/rebates Bonus packs Trade shows Price-off deals Cooperative advertising Loyalty programs Event marketing

Sony lives an innovative sales promotion
Relation to text This slide relates to p. 537 and Exhibit 16.1. Summary overview Leveraging the James Bond movie Quantum of Solace, Sony developed a competition called the Quantum Code (see Exhibit 16.1). More than 8000 participants, aided by their mobile phones, lived like a 00 agent and assisted a mysterious female agent to accomplish a series of missions. Scanning their Quantum codes in-store doubled their chances to win. The official game online forum recorded views and more than 250 would-be James Bonds packed into the final event. The sales promotion generated record sales volumes for Sony. Use of this slide This slide can be used to provide a practical example of an innovative sales promotion targeted at consumers. It is worth pointing out that sales promotion does not necessarily involve boring cents off offers or point of sale materials. Many contemporary sales promotion utilise interactive media in very creative ways.

Sales promotion for a tourist destination
Relation to text This slide relates to p. 539 and Exhibit 16.2 which shows a screen capture from Tourism Australia’s successful promotion. Summary overview An example of a brand-building sales promotion is the Tourism Australia campaign as shown in Exhibit To prove ‘There’s nothing like Australia’, they invited Australians to upload photos of their favourite places accompanied by 25 words starting with ‘There’s nothing like . . .’. This user-generated content, including more than photos, was built into an interactive map of Australia. As they built the map, consumers helped build the brand. Use of this slide This slide can be used to provide a practical example of an innovative sales promotion targeted at consumers. It is worth pointing out that sales promotion does not necessarily involve boring cents off offers or point of sale materials. Many contemporary sales promotion utilise interactive media in very creative ways.

Trade-oriented sales promotion Sales promotion Growth of sales promotion Relation to text This slide presents a mind map of the key topics/concepts covered in Chapter 16 as shown on p. 534. Use of this slide This slide is a transition slide. Techniques Consumer-oriented sales promotion Objectives Techniques

Sales promotion in Australia
More than $6 billion is spent on promotions marketing annually. Growth in sales promotion is expected as marketers become more adept at using viral marketing, and other opt-in communications technologies. 81% of Australian consumers have purchased a product as a direct result of a promotion. Relation to text This relates to material on p. 539 of the text. Summary overview This slide presents various Australian statistics that provide an indication of sales promotion’s usefulness in the IMC program. Use of this slide This slide can be used to introduce the growth of sales promotion and its evolution.

Sales promotion within IMC
Insert Figure 16.2 Development of promotional strategy Relation to text This slide relates to p.540 and Figure 16.2. Summary overview This slide shows marketers’ attitudes to sales promotion and its relationship with other aspects of the IMC program. Far from being a tacked on afterthought, sales promotion is increasingly being integrated into the integration promotional effort. The Promo Industry Trends Report confirms this study, suggesting that marketing budgets are evenly split between consumer promotion, general advertising and trade promotion. This makes sales promotion an increasingly important part of the IMC mix, and often viewed in direct contrast to advertising. The development of sales promotion strategy is illustrated in Figure 16.2. Use of this slide This slide can be used to discuss the evolution of sales promotion—from its initial use as an add-on extra through to a much more integrated part of the IMC program.

Growth of sales promotion
Changing economic conditions Some reasons for growth Growing power of retailers Declining brand loyalty Need to penetrate the clutter Brand proliferation Fragmentation of consumer markets Short-term focus of marketers Increased accountability Increased promotional sensitivity Relation to text This slide relates to material on pp. 540–544 of the text. Summary overview This slide summarises the reasons for the growth in sales promotion. Growing power of retailers—manufacturers used to have most of the power, now retailers have more power through technology, consolidation, and private labelling. Declining brand loyalty—consumers are purchasing more on the basis of price and value. Increased promotional sensitivity—consumers want to save money and respond well to promotions that provide them with the opportunity to do so. Brand proliferation—many new brands offer little differentiation. Fragmentation of consumer markets—traditional mass media advertising has become less effective and promotions are a way to reach market segments. Short-term focus of marketers—sales promotion is a way of generating an immediate increase in sales. Increased accountability—there is pressure on managers to produce sales results. Competition—the use of promotions is seen as way to gain a competitive advantage. Clutter—promotional offers can break through and attract attention. In addition to the factors mentioned above another reason for the increase in spending is that the promotion industry has become more sophisticated and plays a more strategic role in the IMC program of many companies. Use of this slide This slide can be used to discuss the reasons for the increase in the use of sales promotion and the associated shift away from mass media advertising.

Sales promotion—NZ Style
Relation to text This slide relates to p. 545 and Exhibit 16.3. Summary overview This slide presents a screen capture from Air New Zealand’s cranial billboard site. Air New Zealand really used their head to generate interest in their new check-in experience. They recruited 75 kiwis (from more than 550 who applied) to become cranial billboards. They shaved their heads, had Air New Zealand messages tattooed on to their hair-free canvas for two weeks in exchange for $1000 and care instructions (see Exhibit 16.3). The promotion generated NZ$4.3 million in PR value to the brand. Research showed 94% of New Zealand respondents were able to correctly identify the brand and 75% could play back the key messages. Use of this slide This slide provides another innovative example of sales promotion.

The shifting role of the sales promotion agency
Relation to text This slide relates to material on p. 546 of the text and Figure 16.4. Summary overview This slide presents some of the shifts in thinking about the role of sales promotion and sales promotion agencies in IMC. Use of this slide This slide can be used to discuss the changing face of sales promotion and the use of specialist agencies in IMC.

Consumer-oriented sales promotion
Identify target audiences Determine sales promotion objectives Obtain trial and repurchase Relation to text This slide relates to material on pp. 546–550 of the text. Summary overview This slide presents the process for planning consumer-oriented sales promotion: Identify target audiences. Determine sales promotion objectives. Some of the sales promotion objectives include: obtain trial and re-purchase increase consumption among existing users target specific market segments defend current customers (from competitive incursions) enhance IMC and build brand equity. Use of this slide This slide can be used to discuss the importance of adopting a planning process when making sales promotion decisions. Increase consumption Target a specific market segment Defend current customers Enhance IMC and build brand equity Set measurable goals

Masterstrokes with MasterChef
Relation to text This slide relates to material on p. 547 of the text and IMC Perspective 16.1 which discusses the relationship between Coles Supermarkets and the Masterchef TV program. Summary overview This slide displays a screen capture from grocery retailer Coles and provides an opportunity to discuses Coles’ ability to integrate its brand into the cooking program, MasterChef. From the Coles-branded pantry where the masterchefs gathered their ingredients to the logo on the recipe page of the website to the button that delivers us to the Coles online shopping page. In-store, Coles delivered weekly recipe cards for favourite dishes prepared by the constestants and used print and TV advertising to remind consumers that 'to cook like a masterchef, shop where a masterchef shops.' The campaign resulted in a 30% increase in sales and was described by one media commentator as a 'masterstroke for Coles'. Use of this slide This slide can be used to show an example of how sales promotion can be integrated into the IMC program with excellent results.

Schick uses sales promotion to encourage trial
Relation to text This slide relates to material on p. 548 of the text and Exhibit 16.4. Summary overview This slide presents creative from Schick which used an online game to stimulate interest in a new product and encourage trial. The new product, TrimStyle, the first all-in-one shaver and bikini trimmer used a humorous competition to create excitement about the launch. The game, ‘Jill’s Mowing’ combined humour with the art of bikini maintenance to create a virtual environment in which consumers could trim, colour, style and transform the look of their ‘garden’ (Exhibit 16.4). Despite all this mowing, there was a lot of growth. Over customers were exposed to the product, site traffic grew by 300% and TrimStyle became the number-one-selling razor kit. Use of this slide This slide can be used to show an example of how sales promotion can be used to encourage trial.

A new take on designer wear
Relation to text This slide relates to material on p. 549 and Exhibit 16.5. Summary overview This slide presents creative from a Kleenex campaign to position its up-market toilet paper as a fashion item. As consumers opted for cheaper brands of toilet paper during the global financial crisis, Kleenex® Cottonelle® bath tissue brand in New Zealand needed a sales promotion that would give consumers another reason (other than price) to buy their product. Tying in with New Zealand Fashion Week, they provided three top NZ designers from NZ Fashion Tech with a mission to create fashion from toilet paper. This ‘toilet paper couture’ graced the catwalk, the point-of-sale and the media, generating over $1 million in publicity and increasing baseline sales by 24%. It made a mature brand in an established category seem relevant and fashionable again. Use of this slide This slide can be used to show an example of how sales promotion can be used to defend market share.

Packaged-goods manufacturers’ consumer promotions
Relation to text This slide relates to p. 551 of the text and Figure 16.5. Summary This slide presents empirical data showing the types of promotions favoured by packaged-goods manufacturers. Use of this slide This slide can be used to provide examples of the types of sales promotion techniques companies can use to meet their sales objectives.

Sampling works best when
The products are of relatively low unit value, so samples do not cost much The products are divisible and can be broken into small sizes that can reflect the product’s features and benefits The purchase cycle is relatively short so the consumer can purchase in a relatively short time period Relation to text This slide relates to material on pp of the text. Summary overview Sampling involves giving the consumer some quantity of the product at no charge to induce trial. This slide outlines three criteria for an effective sampling program. Use of this slide This slide can be used to discuss sampling as a sales promotion technique. Manufacturers of packaged-goods products such as food, health care items, cosmetics and toiletries, are heavy users of sampling since their products meet the three criteria for an effective sampling program. As a sales promotion technique, sampling is commonly used to introduce a new product or brand to the market.

Sampling distribution
Door-to-door Methods Direct mail Internet With magazine/newspaper Event sampling On-package sampling In-store sampling Other Relation to text This slide relates to material on pp. 552–54 of the text. Summary overview A basic decision of the brand or sales promotion manager is how the sample will be distributed. This slide lists the various options available for distributing samples to consumers. These include: Door-to-door Direct mail In-store sampling On-package sampling Event sampling—has become the fastest growing sector of sampling With newspaper/magazine Internet sites Other types Use of this slide This slide can be used to discuss the various ways samples can be distributed to the consumer. The sampling method is important for two reasons: 1) the cost of the distribution, and 2) the method can control the type of consumer who receives the sample. As such, the distribution method should be considered carefully when deciding on a sampling program.

Bundle of baby products
Relation to text This slide relates to the material on pp. 550–51 of the text and Exhibit 16.6. Summary overview This slide shows a branded Facebook page promoting samples to anyone who clicks 'like' on the page. Use of this slide This slide can be used to show a practical application of sampling is used by marketers.

The oldest and most widely used sales promotion tool
Coupons The oldest and most widely used sales promotion tool Coupons Relation to text This slide relates to material on pp. 554–55 of the text. Summary overview The most effective sales promotion tool is the cent-off coupon. Characteristics of coupons are: They are the oldest and most widely used sales promotion tool. Nearly all packaged-goods manufacturers use them regularly. Use of this slide This slide can be used to introduce coupons as a sales promotion tool. More detailed discussion of coupons will follow. Used by virtually all packaged goods manufacturers

Coupons (cont.) Relation to text
This slide relates to the material on p. 555 of the text and Exhibit 16.8. Summary overview This slide shows a Shop-a-docket: a unique Australian innovation. Use of this slide This slide can be used to show an example of a coupon and to engage students in a discussion of coupon distribution methods.

Advantages and limitations of coupons
Disadvantages Appeal to price-sensitive consumer Difficult to determine how many consumers will use coupons and when Can offer price break without retailer’s cooperation Coupons are often used by loyal consumers who may purchase anyway Relation to text This slide relates to material on pp. 554–55 of the text. Summary overview This slide summarises the advantages and limitations of coupons. Difficult to determine how many consumers will use coupons and when Use of this slide This slide can be used to discuss the advantages and disadvantages of coupons. Coupons are the most popular sales promotion tool for both new and established products. Can be effective way to induce trial of new or existing products Declining redemption rates and high costs of couponing Can be way to defend market share and encourage repurchase Misredemption and fraud

Premiums Premium: an offer of an item of merchandise or service either free or at a low cost that is an extra incentive for customers Two types of premiums Relation to text This slide relates to material on pp. 555–56 of the text. Summary overview This slide defines premiums, which are an offer of an item of merchandise or service either free or at a low cost, which is an extra incentive for customers. There are two basic types of premiums: Free premiums—small gifts or merchandise included in the product package Self-liquidating premiums—require customer to pay for some or all of the cost of the premium plus handling and mailing costs, such as the popular Four’N Twenty salad plate promotion mentioned earlier. Use of this slide This slide can be used to introduce premiums as a sales promotion tool. Packaged-carried premiums have high impulse value and can provide an extra incentive to buy the product. Free premiums have become very popular in the fast food restaurant industry as companies such as McDonald’s and Burger King use premiums in their kids’ meals to attract children. Self-liquidating premiums are designed to not necessarily make money, but rather to cover costs and offer value to the consumer. Self-liquidating premiums: require consumer to pay some or all of the cost of the premium Free premiums: only require purchase of the product

McDonald’s Happy Meals
Relation to text This slide relates to material on p. 556 of the text and Exhibit 16.9. Summary overview This slide shows a Happy Meal from McDonald’s. McDonald’s has become the world’s largest toymaker, commissioning some 750 million toys each year to use as premiums in the Happy Meal. Use of this slide This slide can be used to discuss the use of toys as a premium incentive.

Contests and sweepstakes
Contest: a promotion where consumers compete for prizes or money on the basis of skills or ability. Winners are determined by judging entries or ascertaining which entry comes closest to some predetermined criteria. Relation to text This slide relates to material on p. 557 of the text. Summary overview Contests and sweepstakes are an increasingly popular consumer-oriented promotion. There are differences between contests and sweepstakes: contest—consumers compete for prizes or money on the basis of skill or ability, proof of purchase is generally required to enter or an entry form must be used sweepstake—winners are determined purely by chance and no proof of purchase is required to enter. In Australia, permits are required to conduct contests and sweepstakes. Use of this slide This slide can be used to discuss the use of contests and sweepstakes. They are increasing in popularity as these promotions have appeal and glamour that other sales promotion tools such as cents-off coupons lack. Marketers like these type of promotions because they are perceived to be exciting and attract large numbers of consumers. Sweepstakes/games: a promotion where winners are determined purely by chance and cannot require a proof of purchase as a condition for entry. Winners are chosen by random selection from a pool of entries or generation of a number to match those held by game entrants.

Problems with contests and sweepstakes
Do not contribute to brand building Problems Focus not on brand Use by professionals or hobbyists Effectiveness Legal considerations Relation to text This slide relates to material on p. 558 of the text. Summary overview This slide summarises some of the problems association with contests and sweepstakes. Some companies have cut back or even stopped using them because of these problems. Most firms now use consultants who specialise in the design and administration of contests and sweepstakes to avoid any legal problems. Use of this slide This slide can be used to discuss problems associated with contests and sweepstakes—some very costly. May generate negative publicity

Strategies for improved return on promotions
Offer a popular grand prize. Ensure that there is a good perceived chance of winning. Give more than one prize. Have intermittent prize draws. Make it easy to participate. Make it easy to understand. Give instant gratification. Give prizes of interest. 9. Communicate effectively. 10. Focus on the promotion, not the brand. Relation to text This slide relates to material on p. 558 of the text. Summary overview This slide summarises some of the strategies that are believed to improve the performance of competitions and sweepstakes. These insights, based on the latest ConsumerTrack research (2009), are given by Justin Axford, director of IMI International. Use of this slide This slide can be used to discuss problems and opportunities associated with contests and sweepstakes.

Other popular consumer sales promotion tools
Bonus packs Refunds and rebates Other promotional tools Price-off deals Relation to text This slide relates to material on pp. 559–64 of the text. Summary overview This slide shows other types of popular consumer sales promotion tools. They include: refunds and rebates—manufacturer returns a portion of the purchase price, usually after a proof of purchase bonus packs—extra amount of product at the regular price by providing a larger container price-off deals—price reduction offered on the package frequency/loyalty programs—companies offer the consumer an accumulation of points for the continuation of their purchases event marketing—promotion where a company is linked to an event or when a themed activity is developed for the purpose of creating experiences for consumers and promoting a product or service. Use of this slide This slide can be used to discuss the numerous other consumer sales promotion tools available to marketers. Many of these are growing in popularity, particularly frequency/loyalty programs and event marketing. Frequency/loyalty programs are popular as marketers view this tool as a way to retain customers by encouraging them to use their products on a continual basis. Event marketing has become popular as marketers develop IMC programs that create experiences for consumers in an effort to associate their brands with certain lifestyles and activities. Event marketing Frequency/ loyalty programs

Loyalty programs Relation to text
This slide relates to material on pp. 560–61 of the text and Exhibit Summary overview One of the fastest growing forms of sales promotion is the loyalty program. Loyalty programs operate with a club concept or membership scheme where customers are issued with a card that entitles them to reward points or access to special services. In essence there are two types of loyalty program: reward and recognition. Reward programs: each purchase accumulates points which can be exchanged for goods or services (e.g. Fly Buys, Frequent Flyer). Reward programs are motivated by the consumer’s desire to acquire material possessions. Recognition programs: utilise a club concept. Membership cards provide customers with access to special privileges (e.g. Qantas Flight Deck). Recognition programs are motivated by the consumer’s need for esteem or status. The slide shows an example of the Cinebuzz loyalty scheme, which gives members access to cheaper tickets and special offers. Use of this slide This slide can be used to discuss other types of consumer promotions.

Event marketing Event marketing: promotion where a company or brand is linked to an event or where a themed activity is developed for the purpose of creating experiences for consumers and promoting a product or service. Event sponsorship: an IMC activity where a company develops actual sponsorship relations with a particular event and provides financial support in return for the right to display a brand name, logo or advertising message and be identified as a supporter of the event. Relation to text This slide relates to material on p. 563 of the text . Summary overview Event marketing is one of the fastest growing forms of sales promotion. This slide provides basic definitions of event marketing and event sponsorship. Use of this slide This slide can be used to introduce event marketing.

Summary of consumer-oriented promotions and market objectives
Relation to text This slide relates to material on p. 564 of the text and Figure 16.6. Summary overview This slide outlines sales promotion tools that can be used to accomplish various objectives of marketers and identifies whether the extra incentive or reward is immediate or delayed. Use of this slide This slide can be used to discuss the use of consumer-oriented sales promotion tools for achieving various marketing objectives. Note that some of the sales promotion techniques are listed more than once because they can be used to accomplish more than one objective.

Trade-oriented sales promotion objectives
Maintain trade support for existing products Obtain distribution of new products Objectives Relation to text This slide relates to material on pp 565–566 of the text. Summary overview Trade-oriented sales promotion is targeted to marketing intermediaries such as wholesalers and retailers. There are several reasons promotions are targeted to the trade, including: obtain distribution of new product maintain trade support for existing products encourage retailers to display existing brands build retail inventories. Use of this slide This slide can be used to introduce trade-oriented sales promotion. Like consumer-oriented sales promotion, sales promotion programs targeted to the trade should be based on well-defined objectives and measurable goals and a consideration of what the marketer wants to accomplish. Build retail inventories Encourage retailers to display existing brands

Types of trade-oriented promotions
Contests and incentives Buying Allowances Buying allowances Trade allowances Promotional Allowances Slotting Allowances Point-of-purchase displays Promotional allowances Relation to text This slide relates to material on pp. 566–573 of the text. Summary overview Manufacturers use a variety of trade promotion tools as inducements for wholesalers and retailers. These promotions include: contests and incentives—can be directed toward managers and/or employees at the wholesale or retail level trade allowances—discount or deal to stock, promote or display manufacturer’s product buying allowances—price reduction during a fixed period promotional allowances—discounts for promotional activities slotting allowances—retailers charge fees for a slot or position on shelf point-of-purchase displays—various in-store displays used to sell products sales training programs—assist in sales training programs for reseller personnel trade shows—forum where manufacturers can display products cooperative advertising—cost of advertising is shared by more than one intermediary. Use of this slide This slide can be used to discuss the various types of trade promotions. Many of these are often used to encourage the various marketing intermediaries to assist the manufacturer in the sale of product. Sales training programs Slotting allowances Trade shows Cooperative advertising

Types of trade promotion
Relation to text This slide relates to material on p 567 of the text and Figure 16.6. Summary overview This slide presents a summary of three types of promotions targeted at resellers. Use of this slide This slide can be used to introduce trade-oriented sales promotion.

Types of cooperative advertising
Ingredient- sponsored coop advertising Horizontal cooperative advertising Cooperative advertising Relation to text This slide relates to material on pp 572–573 of the text. Summary overview This slide shows the various types of cooperative advertising. These include: horizontal cooperative advertising—advertising sponsored by a group of retailers or other organisations providing products or services to the market (e.g. automobile dealers in an car dealers’ precinct) ingredient-sponsored cooperative advertising—supported by raw materials manufacturers to help establish end products that include the company’s materials (e.g. DuPont promoting Teflon, Intel Inside) vertical cooperative advertising—manufacturer pays for a portion of the advertising a retailer runs to promote the availability of the manufacturer’s product in the retailer’s place of business. Use of this slide This slide can be used to discuss the various types of cooperative advertising. As with other types of trade promotions, manufacturers have been increasing their cooperative advertising expenditures in recent years. Some companies have been moving money out of national advertising into vertical cooperative advertising because they believe they can have greater impact with ad campaigns in local markets. Vertical cooperative advertising

The sales promotion trap
Relation to text This slide relates to material on p. 574 of the text and Figure 16.8. Summary overview The sales promotion trap refers to the dilemma that companies can get into when several competitors use consumer-oriented promotions extensively. The sales promotion trap and the various quadrants are pictured on this slide and can be summarized as follows: Our firm and competitors cut back on promotions, which yields higher profit margins for everyone. Our firm maintains promotions while competitors cut back, which increases market share, assuming the market is promotion-sensitive and the promotion leads to differentiation. Our firm cuts back promotions while competitors maintain promotions, which results in other firms increasing market share. Our firm and competitors maintain promotions, which keeps market share constant but results in lower profits for everyone. This cell is the classic promotion trap. Use of this slide This slide can be used to discuss the sales promotion trap and the financial and competitive implications of using sales promotion. Marketers must consider both the short-term impact of a promotion and its long-term effect on the brand. The ease with which competitors can develop a retaliatory promotion and the likelihood of doing so should also be considered.

Summary and conclusions
Over the past two decades, marketers have been allocating increased share of promotional budget to sales promotion. Sales promotion techniques can be: consumer oriented trade oriented. Sales promotion techniques include sampling, coupons, premiums, competitions, rebates and refunds. Sales promotion abuse can occur when marketers become overly dependent on sales promotion techniques at the expense of building long-term brand position, brand equity and customer relationships. Relation to text This slide relates to material on p. 575 of the text. Summary overview This is a summary slide.

Chapter 16 Sales promotion

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