1. Chapter 12
Sales Promotion

2. Chapter 12 : Sales Promotion
Chapter Objectives
To understand the role of sales promotions in a company’s integrated marketing communications program and to examine why it is increasingly important
To examine the objectives, strategy, and tactical components of a sales promotion plan
Chapter 12 : Sales Promotion

3. Chapter 12 : Sales Promotion
Chapter Objectives
To examine the consumer and trade sales promotion strategy options and the factors to consider in using them
To understand key IMC issues related to sales-promotion decisions
Chapter 12 : Sales Promotion

4. Characteristics and Types of Sales Promotion
A direct inducement that offers an extra value or incentive to the sales force, distributors, or the ultimate consumer with the primary objective of creating an immediate sale.
An acceleration tool, designed to speed up the selling process and maximizes sales volume.
Can be targeted to different parties in the marketing channel.
Chapter 12 : Sales Promotion

5. Growth of Sales Promotion
The growing power of retailers
New developments have transferred power from manufacturers to retailers
E.g.: Optical checkout scanners, in-store computers
Declining brand loyalty
Loyal coupon users will look for deals instead of buying the same brand
Increased promotional sensitivity
Consumers respond favourably to the incentives new marketing programs are providing
Chapter 12 : Sales Promotion

6. Growth of Sales Promotion
Brand proliferation.
Saturated markets depend on sale promotions to attract consumers to new products.
Fragmentation of the consumer market.
Promotions are being tailored to specific regional market.
Short-term focus.
Used to reach quarterly or yearly sales targets.
Increased accountability.
Ways to relate promotional expenditures to sales and profitability.
Chapter 12 : Sales Promotion

7. Growth of Sales Promotion
Competition.
Development of account-specific marketing.
Clutter.
Promotion has to be able to catch consumers attention.
Reaching a specific target audience.
Certain sales promotion tools reach specific geographic, demographic, and psychographic markets.
Chapter 12 : Sales Promotion

8. Objectives of Consumer Sales Promotion
Trial purchase
Important in new brand strategies
Attract users of a competing brand
Repeat purchase
Incentives such as coupons encourage repeat purchase after trial
Chapter 12 : Sales Promotion

9. Objectives of Consumer Sales Promotion
Increasing consumption
Incentives can create interest to help defend against competitors
Support IMC program/build brand equity
Draw attention to advertisements
Builds relationships with consumers
Chapter 12 : Sales Promotion

10. Consumer Sales Promotion Strategy Decisions
Sales promotion strategy options
Franchise-building Characteristic
Communicate distinctive brand attributes and contribute to the development and reinforcement of brand identity
Nonfranchise-building characteristic
Designed to accelerate the purchase decision process and generate an immediate increase in sales
Incentive characteristic
The incentive the consumer receives can either be immediate or delayed
Chapter 12 : Sales Promotion

11. Consumer Sales Promotion Strategy Decisions
Application across product lines
The degree to which each sales promotion tool is applied to the range of sizes, varieties, models or products
3 important product decisions:
Should the sales promotion be run on the entire line or on individual items?
If selective applications (individual items) which items?
Should the sales promotion be run on “regular” stock or some other special version?
Application across geographic markets
National or select markets
Chapter 12 : Sales Promotion

12. Consumer Sales Promotion Tactics Decisions
Value of incentive
Economic
Price premium
Discount
Non-economic
Collectables
Limited edition items
Timing
Distribution
Chapter 12 : Sales Promotion

13. Chapter 12 : Sales Promotion
Sampling
Sampling involves a variety of procedures whereby consumers are given some quantity of a product for no charge to induce trial.
Criteria for an effective sampling program:
Products are of relatively low unit value
Products are divisible
Purchase cycle is relatively short
Chapter 12 : Sales Promotion

14. Strengths and Limitations of Sampling
Excellent way to induce a prospective buyer to try a product or service.
Consumers experience the brand directly, gaining a greater appreciation for its benefits.
Limitations:
The brand must have some unique or superior benefits for a sampling program to be worthwhile.
The benefits of some products are difficult to gauge immediately and large affordable samples may be required to encourage appreciation of the brand
Chapter 12 : Sales Promotion

15. Chapter 12 : Sales Promotion
Sampling Methods
Door-to-door sampling
Sampling through media
Sampling through the mail
In-store sampling
On-package sampling
Event sampling
Direct sampling
Location sampling
The Internet
Creative approaches
Chapter 12 : Sales Promotion

16. Chapter 12 : Sales Promotion
Coupons
The oldest, most widely used, most popular and most effective sales promotion tool
Coupons have been around since 1895
In recent years they have become increasingly popular
Chapter 12 : Sales Promotion

17. Chapter 12 : Sales Promotion
Strengths of Coupons
Coupons make it possible to offer a price reduction to consumers who are price-sensitive.
Coupons make it possible to reduce the retail price of a product without relying on retailers for cooperation.
Coupons reduce the consumer’s perceived risk and encourage repurchase after initial trial.
Encourage nonusers to try a brand, repeat purchase among current users, and promote new, improved product versions.
Chapter 12 : Sales Promotion

18. Limitations of Coupons
It can be difficult to estimate how many consumers will use a coupon and when.
It is difficult to prevent coupons from being used by consumers who already use a brand when using the coupons to attract new users.
Low redemption rates.
High costs.
Coupon misrepresentation or fraud.
Chapter 12 : Sales Promotion

19. Chapter 12 : Sales Promotion
Coupon Fraud
Redemption of coupon by consumers for a product or size not specified on the coupon.
Redemption of coupons by salesclerks in exchange for cash.
Gathering and redemption of coupons by store managers or owners without the accompanying sales of the product.
Gathering or printing of coupons by criminals who sell them to unethical merchants, who redeem them.
Chapter 12 : Sales Promotion

20. Chapter 12 : Sales Promotion
Coupon Distribution
Distribution through newspaper
freestanding inserts (FSI)
Direct mail
Newspapers/magazines as couponing vehicles
Inside or outside of package
bounce-back coupon
cross-ruff coupon
instant coupon
In-store couponing
Chapter 12 : Sales Promotion

21. Chapter 12 : Sales Promotion
Premiums
A premium is an offer of an item of merchandise or service either free or at a low price that is an extra incentive for purchasers.
Free premiums
Usually small gifts or merchandise included in the product package or sent to consumers who mail in a request along with a proof of purchase.
Self-liquidating premiums
Require the consumer to pay some or all of the costs of the premium plus handling and mailing costs.
Chapter 12 : Sales Promotion

22. Contests and Sweepstakes
A contest is a promotion where consumers compete for prizes or money on the basis of skills or ability. The company determines winners based on predetermined criteria and a purchase incentive is usually provided.
A sweepstakes is a promotion where winners are determined purely by chance; it cannot require a proof of purchase or purchase incentive as a condition for entry.
Chapter 12 : Sales Promotion

23. Limitations of Contests and Sweepstakes
Many sweepstakes and/or contest promotions do little to contribute to consumer building and may even detract from it.
The sweepstakes or contest often become the dominant focus rather than the brand.
Numerous legal considerations affect the design and administration of contests and sweepstakes.
Participation by professionals or hobbyists who submit many entries but have no intention of purchasing the product or service.
Chapter 12 : Sales Promotion

24. Chapter 12 : Sales Promotion
Refunds and Rebates
Offers by the manufacturer to return a portion of the product purchase price, usually after the consumer supplies some proof of purchase.
Consumers are usually very responsive to these offers, particularly as the size of the savings increase.
Chapter 12 : Sales Promotion

25. Strengths and Limitations of Refunds and Rebates
Help create new users
Encourage brand switching or repeat purchases
Limitations:
Many consumers are not motivated by a refund offer because of delay and effort
Consumers perceive manufacturers as offering rebates to sell products that are not faring well
When small refunds are being offered, marketers may find other promotional incentives more effective
Chapter 12 : Sales Promotion

26. Chapter 12 : Sales Promotion
Bonus Packs
Bonus packs offer the consumer an extra amount of a product at the regular price by providing larger containers or extra units.
Bonus packs result in a lower cost per unit for the consumer and provide extra value as well as more product for the money.
Chapter 12 : Sales Promotion

27. Chapter 12 : Sales Promotion
Price-Off Deals
The price-off deal reduces the price of the brand.
Typically offered right on the package through specially marked price packs.
Can encourage consumers to purchase larger quantities, preempting competitors’ promotions and leading to greater trade support.
Chapter 12 : Sales Promotion

28. Chapter 12 : Sales Promotion
Frequency Programs
Continuity or loyalty programs.
Commonplace in a number of product and service categories, particularly travel and hospitality, as well as among retailers.
Viewed by marketers as a way to develop strong consumer loyalty.
Chapter 12 : Sales Promotion

29. Chapter 12 : Sales Promotion
Event Marketing
Event marketing is a type of 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 the consumers and promoting a product or service.
An event sponsorship is an integrated marketing communications 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.
Chapter 12 : Sales Promotion

30. Objectives of Trade Sales Promotion
Obtain Distribution of New Products
trial purchase objective
Maintain Trade Support for Established Products
repeat purchase objective.
Build Retail Inventories
Encourage Retailers to Display Established Brands
consumer sales promotion objective.
Chapter 12 : Sales Promotion

31. Trade Sales Promotion Strategy Options
Contests and Incentives
Trade Allowances
Buying, Promotional, Slotting
Displays and Point-of-Purchase Materials
Sales Training Programs
Trade Shows
Cooperative Advertising
Horizontal, Ingredient-sponsored, Vertical
Chapter 12 : Sales Promotion

32. IMC Issues Related to Sales Promotion Decisions
Budget Allocation
Creative Themes
Media Support
Strategic Role
Chapter 12 : Sales Promotion

33. The Shifting Role of the Promotion Agency
Figure 12-7
Chapter 12 : Sales Promotion

34. The Sales Promotion Trap
Figure 12-8
Chapter 12 : Sales Promotion