Role (Explain): Promotion is communication: (Explain) Types of communication (define) ◦ Inform ◦ Persuade ◦ Remind ◦ Define Sender, Encoding, message channel, decode, receiver. ◦ Interpersonal ◦ mass 1 Usually involves short term activities. Offers some type of incentive to make a purchase. Can be successfully used in all channels of distribution. 2 Types of Promotions Trade Promotions ◦ Slotting Allowances ◦ Buying Allowances ◦ Trade Shows and Conventions ◦ Sales Incentives Consumer Sales Promotions ◦ Licensing ◦ Promotional Tie-Ins ◦ Visual Merchandising and Displays ◦ Premiums & Incentives ◦ Product Samples 3. Sales Promotion - All marketing activities, other than personal selling, advertising, and publicity, that are used to stimulate consumer purchasing and sales effectiveness. Objectives of Sales Promotion ◦ Increase sales ◦ Inform customers about new products ◦ Create a positive store or corporate image 3 Characteristics ◦ Short term activities ◦ Offers some type of incentive ◦ Can be successfully used in all channels of distribution 4 Sales promotion can be either consumer or trade oriented Trade Promotions - sales promotion activities designed to gain manufacturers’, wholesalers’, and retailers’ support for a product. More money is spent on promoting to businesses than to consumers. ◦ 1. Slotting allowances - a cash premium paid by the manufacture to a retail chain for the costs involved in placing a new product on its shelves. ◦ 2. Buying allowances - special price discount given by manufacturers to wholesalers and retailers to encourage them to either buy a product or buy a larger quantity. ◦ 3. Trade Shows and Conventions - designed to reach wholesalers ◦ 4. Sales incentives - awards given managers and employees who successfully meet or exceed their company’s set sales quota. 5 Consumer Sales Promotions - designed to encourage customers to buy a product. ◦ 1. Licensing - Organizations, such as manufactures, movie makers, sports teams, and celebrities, may license for a fee their logo, trademark, trade characters, names and likenesses, or personal endorsements to a business to be used in promoting the business’s products. ◦ 2. Promotional tie-ins - involve sales promotional arrangements between one or more retailers or manufacturers. They combine their resources (advertising and sales promotional activities) to do a promotion that creates additional sales for each partner. 6 ◦ 3. Visual Merchandising and Displays ◦ Visual Merchandising - the coordination of all physical elements in a place of business so that it projects the right image to its customers ◦ Displays - visual and artistic aspects of presenting a product to a target group of customers. 7 ◦ 4. Premium and Incentives - most popular and frequently used sales promotion type ◦ Premiums - low cost items given away free to consumers as a condition of purchase. Coupons - certificates given to customers entitling cash discounts Factory Packs (in-packs)- free gifts placed in product packages Traffic Builders - low cost premiums like key chains, pens Coupon Plans - ongoing programs in exchange for labels, coupons, or other tokens from one or more purchases ◦ Incentives - higher-priced products given in contests or sweepstakes ◦ 5. Product Samples - free trial size of a product that is sent through the mail, distributed door-to-door, or through retail stores and trade shows 8 Advantages of Sales Promotions ◦ Unique and has special appeal to a potential customer ◦ Helps build customer loyalty Disadvantages of Sales Promotions ◦ Difficult to end without the customers becoming dissatisfied ◦ Store image and sales can suffer if the promotion is not properly planned and managed ◦ Only designed to supplement other promotional efforts and cannot make up for poor products 9 May be targeted at the trade or ultimate consumer; Makes use of a variety of formats: premiums, coupons, contests, etc.; Attracts attention, offers strong purchase incentives, dramatizes offers, boosts sagging sales; Stimulates quick response; Short-lived; Not effective at building long-term brand preferences 10 Sales promotion - promotional activities other than advertising, personal selling, or publicity, which stimulate purchases. Ex’s: Displays, Fashion Shows, Coupons, Free Samples, Contests, Novelty Items, Trade Shows, Demonstrations, Exhibits 11