ADVERTISING:
Sales Promotion
Sales Promotion
•
A special incentive to:
– Distributors
– Salespeople, or
– Customers
•
to encourage an immediate sale
Growth of Sales Promotion
100%
90%
Consumer Promotions
80%
70%
60%
Media Advertising
50%
40%
30%
20%
Trade Promotions
10%
0%
'89 ‘90 ‘91 ‘92 '93 '94 '95 '96 '97 '98 '99 ‘00
Percent of Total Promotional Dollars, 3-year Moving Average.
Types of Consumer Promotions Used
Types of Promotions
• Franchise Building
– LONG TERM preferences
– Communicate distinctive brand
identity
– Example:
• “Frequency” programs with brand or store image
• Non-Franchise Building
– IMMEDIATE sales
– Examples:
Price-off deals
Bonus packs
Rebates or refunds
Objectives of Sales Promotion
• Obtaining trials
• Increasing repurchase
• Increasing overall consumption
• Rewarding current customers
• Reaching out to a new market
• Enhancing advertising efforts
Sales Promotion Vehicles
Consumer-Oriented “Pull”
Trade-Oriented “Push”
Samples
Contests, dealer incentives
Trade allowances
Point-of-purchase displays
Dealer premiums
Trade shows
Cooperative advertising
Coupons
Premiums
Contests/sweepstakes
Refunds/rebates
Bonus packs
Price-offs
Event sponsorship
Sampling
Sampling Works Best
When
The Products
Are of Relatively
Low Unit Value,
So Samples
Don’t Cost Much
The Products Are
Divisible and Can
Be Broken Into
Small Sizes That
Can Reflect the
Products Features
and Benefits
The Purchase
Cycle Is
Relatively Short
So the
Consumer Can
Purchase in a
Relatively Short
Time Period
Samples -- Media
• Door-to-door
• Direct mail
• In-store sample pack
• Cross-product sampling
• Co-op package distribution
• With newspaper / magazine
• Any of above with coupon
Display Cards
Coupons
Advantage
• Works – will increase sales
Disadvantages
• May be redeemed by loyal users who
would buy anyway
• Sometimes difficult to estimate
redemption levels in advance
• Expensive
Percent of Sales with Coupons
43%
Disposable Diapers
35%
Ready-to-Eat Cereal
29%
Liquid Detergents
25%
Deodorants
24%
Sanitary Protection
20%
Coffee
12%
Pet Food
11%
Adult Cold Remedies
8%
Carbonated Beverages
7%
Candy
Gum
2%
Sweepstakes and Contests
ADVANTAGES:
• Gets consumer involved with the
product
• Generates interest and attracts
attention to advertising
DISADVANTAGES
• May overshadow the product
• May detract from brand image
Spending on Event Sponsorship
How much is spent
(billions)
Where it is spent
$6
$5
$4
$3
$2
$1
4.705.00
4.20
3.70
3.30
2.80
2.50
2.10
1.75
$0
88 89 90 91 92 93 94 95 96
10%
9%
67%
Sports
Festivals
Arts
8%
6%
Music
Cause Mktg.
Benefits of Event Marketing
1. Greater Awareness
2. Associate Product with Event
3. New Potential Clients (Sales)
4. Media Coverage
The Sales Promotion Trap
Our Firm
Reduce
Promotions
Continue
Promotions
Competition
Reduce
Promotions
Continue
Promotions
Lose market share
low profits
Maintain share
low profits
Higher profits for
everyone!
Gain market share
But low profits
Quote of the day
If you’re selling a product
that needs to be purchased
regularly, and it’s really
great, just give away free
samples.
Mike Basil
Professor of Marketing