Topic Seven
Sales
Promotions
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Introduction to Sales Promotion
What Exactly is Sales Promotion?
Any incentive used by manufacturers to induce
the trade and/or consumers to buy a brand and
encourage sales force to aggressively sell it
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Introduction to Sales Promotion
Promotion Targets
All three groups – the sales force, retailers and
consumers – are targets of sales promotional
efforts
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Sales Promotion
Sales Force
Retailers
Pull
Push
Encourage
Brand-Level Advertising
and Sales Promotion Mix
Consumers
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Sales Promotions in the MarCom Mix
A Comparison of Sales Promotion with Other Marketing Communication
Tool
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Sales Promotions in the MarCom Mix
• Stimulate Push or Pull Strategy
– Push: Using promotional efforts to push product through the
selling chain
– Pull : Marketing efforts directed to final consumers and is
usually implemented with large marketing expenditures.
customer demand to “pull” the product
Create
• Introduce New Product
– Useful in introducing a new product
• Build a Brand
– Sales promotion can build brand loyalty
– i.e. IBM gives away free CD Rom with lots of software who bought new
computer
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Sales Promotions - Can
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Stimulate sales force
Invigorate mature brand sales
Facilitate introduction of new products
Increase merchandising space
Neutralize competitive ads
Obtain trail purchases
Hold current users
Increase product usage
Preempt competition
Reinforce advertising
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Sales Promotions - Can’t
• Compensate for lack of training and
advertising
• Give a long-term reason for repeat
purchases of the brand
• Permanently stop an established brand’s
declining sales or basic non-acceptance
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Types of Sales Promotion
a) Consumer Oriented Sales Promotion
b) Trade Oriented Sales Promotion
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Types of Sales Promotions
(a) Consumer Oriented Sales Promotion
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Sampling
Coupons
Free Standing Inserts
Premiums
Price Off
Bonus Pack
Rebates/Refund
Contest & Sweepstakes
Games
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Sampling
Direct mail
Newspapers and
magazines
Door to door by special
distribution crews
On- or in-pack sampling
High-traffic locations
In-store sampling
Mailed directly to
households
Targeted by
demographic
characteristics or
geodemographics
Internet sampling
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Sampling
Direct Mail
Sampling
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Sampling
Illustration of sample
distributed via Direct mail
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Sampling
Direct mail
Newspapers and
magazines
Door to door by special
distribution crews
On- or in-pack sampling
High-traffic locations
The Sunday newspaper
is an increasingly
attractive medium
for broad-scale
sampling
In-store sampling
Internet sampling
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Sampling
Newspaper
Sampling
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Sampling
Sampling via the
Sunday newspaper
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Sampling
Direct mail
Newspapers and
magazines
Door to door by special
distribution crews
On- or in-pack sampling
High-traffic locations
In-store sampling
Allows considerable
targeting
Lower cost than instore or direct-mail
sampling
Short lead times
Internet sampling
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Sampling
Door-to-door
Sampling
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Sampling
Door-to-Door
sampling
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Sampling
Direct mail
Newspapers and
magazines
Door to door by special
distribution crews
On- or in-pack sampling
High-traffic locations
Uses the package of
another product to
serve as the sample
carrier
In-store sampling
Internet sampling
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Sampling
On- or In-pack
Sampling
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Sampling
Direct mail
Newspapers and
magazines
Door to door by special
distribution crews
On- or in-pack sampling
High-traffic locations
Shopping centers,
movie theaters,
airports, or special
events
In-store sampling
Internet sampling
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Sampling
Direct mail
Newspapers and
magazines
Door to door by special
distribution crews
On- or in-pack sampling
High-traffic locations
In-store sampling
Provide product
samples in grocery
stores and other
retail outlets for trial
while consumers are
shopping
The most frequent
form
Internet sampling
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Sampling
In-store
sampling
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Sampling
Direct mail
Newspapers and
magazines
Door to door by special
distribution crews
On- or in-pack sampling
High-traffic locations
In-store sampling
Brand managers are
increasingly
distributing samples
online
Specialized online
sample delivery
firms aid this process
Internet sampling
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Sampling Trends
• Increased targeting
• Creative distribution methods
• Estimating return on investment
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Sampling Trends - Increased Targeting
Sampling service
targeting for
expectant new
parents
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How Effective is Sampling?
• No doubt that sampling is effective for trial
purchasing
• No single answer possible whether
sampling increases or decreases repeat
purchase behavior
• The impact of sampling on repeat purchase
behavior probably is moderate by the
quality of the sampled product
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When Should Sampling Be Used?
• Brand is demonstrably superior/has distinct
relative advantages
• Concept is difficult to communicate by
advertising alone
• Can afford to generate consumer trial quickly
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Problems with Sampling
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Expensive
Mishandling in distribution
Distributed to the wrong market
In- or on-package samples do not capture current
non-consumers
• Can fail to reach sufficient numbers of consumers
to justify its expense
• May be misused by customers
• Pilferage
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Couponing
Coupon
A promotional device that provides
cents-off to consumers upon its
redemption
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Couponing Developments
Coupon offer from
General Motors
Use of coupon is not
restricted to
packaged goods
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Couponing
Coupons for
automotive
maintenance
service
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Changes in Coupon Distribution
• Freestanding insert (FSI) is preferred
– Valassis Inserts, News America Marketing
• The establishment of cooperative coupon
programs
– Val-Pak Direct Marketing Systems
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Economic Impact
Coupon for
Brummel & Brown
Spread
The actual cost of
couponing is costly
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Is Couponing Profitable?
• Households most likely to redeem coupons
were also the most likely to buy the brand in
the first place
• However, companies have to offer coupons to
prevent losing consumers to other brands that
do offer coupons
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Point of Purchase Couponing
Instantly Redeemable Coupons
Shelf- Delivered Coupons
Scanner- Delivered Coupons
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Peelable from the package at the point of purchase
Represent an immediate reward
An alternative to price-off deals
Redemption rate about 30%
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Point of Purchase Couponing
Instantly Redeemable Coupons
Shelf- Delivered Coupons
Scanner- Delivered Coupons
• Instant Coupon Machines, Smart SourceTM
• Machines are attached to the shelf alongside
coupon-sponsoring brands
• Redemption rate about 11%
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Shelf-Delivered Coupons
Instant coupon machine
(so called SmartSource)
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Point of Purchase Couponing
Instantly Redeemable Coupons
Shelf- Delivered Coupons
Scanner- Delivered Coupons
• Catalina Marketing Corp. offers two programs
• Reward is delayed
• Potentially very effective because they provide a way
to carefully target coupon distribution
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Point of Purchase Couponing
Scanner- Delivered Coupons
Checkout Coupon
Checkout Direct
• Delivers coupons based on the particular brands a
shopper has purchased
• Directed at competitive-brand users
• Redemption rate about 9%
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Checkout Coupon
Checkout coupon for
Lean Cuisine Hearty Portions
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Check-Out Coupons
An advertisement for
stores to use
checkout coupons
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Point of Purchase Couponing
Scanner- Delivered Coupons
Checkout Coupon
Checkout Direct
• A coupon for the sponsoring manufacturer’s brand is
automatically dispensed for use on the shopper’s next
purchase occasion
• Directed at users who satisfy a manufacturer’s
prescribed demographic or product-usage
requirements
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Freestanding Inserts(FSI’s)
FSI
advertisement
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FSI’s
FSI
advertisement
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FSI’s
FSI
advertisement
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FSI’s
FSI
advertisement
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In- and On- Pack Coupons
• Included in- or on- product’s package
• Cannot be removed at the point of purchase;It’s for
next purchase
• A coupon for one brand is promoted by another
brand (crossruffing)
• Has bounce-back value
• No distribution costs
• Redemption rates are higher
• Delayed value to consumers
• Don’t reach nonusers of the carrying brand
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Premiums
Premiums
Articles of merchandise or service
offered by manufacturers to induce
action on the part of the sales force,
trade representatives, or consumers
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Premiums
Mail-in Offers
In-, On-, and
Near- Pack
Self-Liquidating
Receive a premium item for
submitting a required number
of proofs of purchase
Not only stimulate consumer
trial, also reward brand
loyalties and encourage
repeat purchase behavior
2 to 4% of consumers take
advantage
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Premiums
Mail-in offers
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Premiums
Mail-in Offers
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Premiums
Mail-in offers
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Premiums
Free-in-the-Mail
In-, On-, and
Near- Pack
Self-Liquidating
Offer a premium item inside or
attached
Immediate value
Near-pack premium provide the
retail trade with premium
item that retailers then give
to consumers
Near-pack is less expensive due
to no additional packaging
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Premiums
Free-in-the-Mail
In-, On-, and
Near- Pack
Self-Liquidating
Consumer mails in a proof of
purchase along with sufficient
money to receive the
premium item
The premium should be
appealing and represent a
value
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Premiums
Self-liquidating
premium
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Premiums
Self-liquidating
premium
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Price - Offs
Effective for certain objectives
• Reward present users
• Get consumers to purchase larger
quantities than normal
• Establish repeat purchase
• Ensure promotion dollars reach consumers
• Obtain off-shelf display space
• Provide the sales force with incentive
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