Welcome to
Chapter
13
Sales Promotion
Prepared By: Mr. Afjal Hossain
Lecturer
Department of Marketing
Patuakhali Science & Technology University
Kenneth E. Clow & Donald Baack
Integrated Advertising, Promotion & Marketing Communications – 2nd ed.
Chapter Outline
 Why
do study Consumer Promotion?
 Different
forms of Consumer Promotion.
 Advantages
& Drawbacks of Different Consumer
Promotion.
 Application
of Different Consumer Promotion.
Leon G. Schiffman & Leslie Lazar Kanuk “Consumer Behavior” 8th edition, Prentice Hall – 2006
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Sales Promotion
 Also
 Are
refers to consumer promotion.
the incentives aimed at a firm’s customers.
 This
type of promotions are directed toward
individuals or firms that use the product and do not
resell it to another business.
Leon G. Schiffman & Leslie Lazar Kanuk “Consumer Behavior” 8th edition, Prentice Hall – 2006
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Why Consumer promotion?

Stimulate purchase

Introduce as a trial

Create new users

Increase repurchase from occasional customers

Reward loyal customers
Leon G. Schiffman & Leslie Lazar Kanuk “Consumer Behavior” 8th edition, Prentice Hall – 2006
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General Categories of Promotions
1.
Consumer franchise – building
To increase awareness & loyalty of a brand.
Goal: Build a favorable image by pointing out unique features
Ex: style, design etc.
2.
Consumer Sales – building promotions
Focus on immediate sales.
Ex: discount, coupon etc.
Leon G. Schiffman & Leslie Lazar Kanuk “Consumer Behavior” 8th edition, Prentice Hall – 2006
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Promotions that Work

Unique, Desirable Offering or Premise

They make you believe you can win!

Simple to Enter / Participate
Leon G. Schiffman & Leslie Lazar Kanuk “Consumer Behavior” 8th edition, Prentice Hall – 2006
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Types/ Forms of Consumer
Promotions









Coupons
Premiums
Contests & Sweepstakes
Refunds & Rebates
Free samples/ Sampling
Bonus Packs
Price-offs
Specialties
Price Reductions
Leon G. Schiffman & Leslie Lazar Kanuk “Consumer Behavior” 8th edition, Prentice Hall – 2006
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Types of Consumer Promotions ---
 Coupons
price reduction offer to a consumer for achieving
another thing.
It may be percentage off the retail price. Three types of coupons are:
1.
2.
3.
Instant redemption coupons:
Bonus-back coupons:
Scanner-delivered coupons:
Leon G. Schiffman & Leslie Lazar Kanuk “Consumer Behavior” 8th edition, Prentice Hall – 2006
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Types of Consumer Promotions -- Coupons: Three types of coupons
1.
Instant redemption coupons:
This type of coupons are given out along with free samples of a product to
encourage consumers to try a new brand.
2.
Bonus-back coupons:
This type of coupons are given inside packages to encourage repeat
purchase.
3.
Scanner-delivered coupons:
Firms issue coupons at cash register by triggering an item being scanned.
The item being scanned is normally a competitor’s product. It is used to
brand switching.
Leon G. Schiffman & Leslie Lazar Kanuk “Consumer Behavior” 8th edition, Prentice Hall – 2006
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Types of Consumer Promotions -- Coupons:
1.
Problems
Reduced revenues
Using coupon it is to reduce price of the product in case of the loyal customers
in the next purchase. So, total revenue is reduced.
2.
Mass-cutting
This problems occurs only for a fraudulent retail outlet/ illegal coupon ring.
3.
Counterfeiting
Coupons are copied & send back to the manufacturers. Newspaper generated
black & white coupons are easiest to counterfeit.
4.
Misredemptions
It is of misrepresenting the coupon for a wrong size cane. Coupon for 250 gm
cane rather than 500 gm cane.
Leon G. Schiffman & Leslie Lazar Kanuk “Consumer Behavior” 8th edition, Prentice Hall – 2006
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Types of Consumer Promotions ---
 Coupons:
Tactics to Improve Coupons Effectiveness
1.
The Face value of the coupon: Higher value
2.
Distribution method: Free standing inserts (FSI)
3.
Attractiveness
Leon G. Schiffman & Leslie Lazar Kanuk “Consumer Behavior” 8th edition, Prentice Hall – 2006
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Types of Consumer Promotions -- Premiums
prizes, gifts/ other special offers consumer receive
while purchasing products
In this case consumers pay full price of the product. Four types of
premiums are:
1.
2.
3.
4.
Free-in-the-mail premiums
In or on-package premiums
Store or manufacturer premiums
Self-liquidating premiums
Leon G. Schiffman & Leslie Lazar Kanuk “Consumer Behavior” 8th edition, Prentice Hall – 2006
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Types of Consumer Promotions -- Premiums: Four types of premiums
1.
Free-in-the-mail premiums
Gifts, individuals receive for purchasing goods. To receive the gift, the customer must mail in a
proof or purchase to the manufacturer, who then mails the gift back to the consumer.
Sometimes, more than one purchase is required to receive the gift.
2.
In or on-package premiums
small gifts such as toys in cereal boxes. Sometimes, the gift is disguised or packaged so the
consumer must buy the product to find out which premium it contains. Ex: Package of blades
with the purchase of razor.
3.
Store or manufacturer premiums
Gifts given by either the retail store or manufacturer when the consumers purchase a product.
Ex: Fast-food restaurants offer children a toy with the purchase of child’s meal.
4.
Self-liquidating premium
Consumers purchase when the manufacturers bear the shipping or handling costs just paying
for the products price.
Leon G. Schiffman & Leslie Lazar Kanuk “Consumer Behavior” 8th edition, Prentice Hall – 2006
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Types of Consumer Promotions ---
 Premiums:
1.
Problems
Time Factor
The offers would be for a small time otherwise it will face a huge loss.
2.
Cost
Higher cost premiums create more sales but cost more to provide.
Leon G. Schiffman & Leslie Lazar Kanuk “Consumer Behavior” 8th edition, Prentice Hall – 2006
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Types of Consumer Promotions ---
 Premiums:
1.
2.
3.
4.
5.
Building successful Premium Programs
Match the premium to the target market
Carefully select the premiums (avoid fads, try for
exclusivity)
Pick a premium that reinforces the firm’s product and
image
Integrate the premium with other IMC tools (especially
advertising & POP displays)
Don’t expect premiums to increase short-term profits
Leon G. Schiffman & Leslie Lazar Kanuk “Consumer Behavior” 8th edition, Prentice Hall – 2006
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Types of Consumer Promotions -- Contests
& Sweepstakes
Contests
Purchase is required to enter
Consumers/
Participants
perform some type of activity
Sweepstakes
No purchase is required to enter
to Participants need not to perform
any activity
The winner is selected based on The chance of winning a
who performs best or provides sweepstakes are based on a
the most correct answers
probability factor
Can’t be restriction for
purchase of the products
Consumer goods related
the Can be restricted for the
customers to one entry per visit
to the store or some other
location
Sports related
Leon G. Schiffman & Leslie Lazar Kanuk “Consumer Behavior” 8th edition, Prentice Hall – 2006
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Types of Consumer Promotions -- Contests
1.
& Sweepstakes: Problems
Costs
to provide prize, entry forms, legal statements, supportive advertising etc.
2.
Consumer Indifference
State lotteries, internet gambling create individual difference.
3.
Clutter
Many companies can offer at a given time
Leon G. Schiffman & Leslie Lazar Kanuk “Consumer Behavior” 8th edition, Prentice Hall – 2006
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Types of Consumer Promotions ---
 Contests
& Sweepstakes: Creating successful C & S
1.
Finding the right prize
2.
Undertake an advantage of a special event
sports contest or celebration of any renowned person
Leon G. Schiffman & Leslie Lazar Kanuk “Consumer Behavior” 8th edition, Prentice Hall – 2006
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Types of Consumer Promotions -- Refunds
& Rebates
cash returns offered to consumers for the purchase
of a product
Consumers pay full price for the product but can mail in some type of
proof of purchase and then the manufacturer refunds a portion of the
purchase price.
1.
2.
Refunds
Rebates
Leon G. Schiffman & Leslie Lazar Kanuk “Consumer Behavior” 8th edition, Prentice Hall – 2006
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Types of Consumer Promotions ---
 Difference
between Refunds & Rebates
Refunds
Rebates
Cash returns on “soft goods”
Cash returns on “hard goods”
Soft goods are – food or clothing
Hard goods are – ticket items i.e.
automobiles
Refunds are of small amount of
money
Rebates are of large amount of
money
Refund on a food item is Tk. 50
Rebate on a car is Tk. 2,000
Refund is always on products
Rebates is for both products &
services
Leon G. Schiffman & Leslie Lazar Kanuk “Consumer Behavior” 8th edition, Prentice Hall – 2006
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Types of Consumer Promotions ---
 Refunds
1.
& Rebates: Problems
Costs
mailing & record keeping cost involved.
2.
Lost revenue
total revenue is decreased.
3.
Diminished Effectiveness
no new purchase is evolved.
Leon G. Schiffman & Leslie Lazar Kanuk “Consumer Behavior” 8th edition, Prentice Hall – 2006
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Types of Consumer Promotions ---
 Refunds
& Rebates: Creating effective RR
1.
Visibility
2.
Perceived newness
3.
An impact
Leon G. Schiffman & Leslie Lazar Kanuk “Consumer Behavior” 8th edition, Prentice Hall – 2006
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Types of Consumer Promotions -- Sampling
encourage consumers to try new product
Sampling is the delivery of actual product to consumers for their use or consumption.
Samples are provided free of charge. Often, companies provide samples of products to
potential clients. Sampling can be used in service sector i.e. Saloon or Dentist. Seven
types of sampling:
1.
2.
3.
4.
5.
6.
7.
In-store distribution
Direct sampling
Response sampling
Cross-ruff sampling
Media sampling
Professional sampling
Selective sampling
Leon G. Schiffman & Leslie Lazar Kanuk “Consumer Behavior” 8th edition, Prentice Hall – 2006
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Types of Consumer Promotions ---
 Sampling: Seven types of sampling
1.
In-store sampling
when food product companies have personnel, cooking the food and
passing it out to individuals in the store
2.
Direct sampling
samples are mailed or delivered door to door to consumers.
3.
Response sampling
samples are made available to individuals or businesses responding to a
media offer on television, on the internet or from a magazine etc.
Leon G. Schiffman & Leslie Lazar Kanuk “Consumer Behavior” 8th edition, Prentice Hall – 2006
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Types of Consumer Promotions ---
 Sampling: Seven types of sampling
4.
5.
6.
7.
Cross-ruff sampling
samples of one product on another.
Media sampling
samples are included in the media outlet.
Professional sampling
samples are delivered by professionals, doctors provide free samples to
patients.
Selective sampling
samples are distributed at a site i.e. state fair, parade, hospital, restaurant,
sporting event etc.
Leon G. Schiffman & Leslie Lazar Kanuk “Consumer Behavior” 8th edition, Prentice Hall – 2006
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Types of Consumer Promotions ---
 Sampling:
1.
Problems
Cost
Samples are mailed, adding to the expense of the program.
Leon G. Schiffman & Leslie Lazar Kanuk “Consumer Behavior” 8th edition, Prentice Hall – 2006
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Types of Consumer Promotions ---
 Sampling:
Effective use of samples
1.
It introduces a new product or a new version/ an existing
product to a new target market or a prospect.
2.
Willing to switch brands if the trial use of the product was a
positive experience.
Leon G. Schiffman & Leslie Lazar Kanuk “Consumer Behavior” 8th edition, Prentice Hall – 2006
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Types of Consumer Promotions ---
 Bonus
Packs
encourage to buy existing product with an extra unit
when an additional extra number of items is placed in a special product package then it
is called bonus packs. Ex: Buys 4 pens for the price of 3 pens in a bonus pack.
Leon G. Schiffman & Leslie Lazar Kanuk “Consumer Behavior” 8th edition, Prentice Hall – 2006
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Types of Consumer Promotions ---
 Bonus
1.
2.
3.
4.
Packs: Problems
When the bonus is small consumers often believes the price of
the product has not truly changed.
When the bonus is large, consumers tend to believes that the
price was first increased up to compensate for the additional
quantity.
The size of the bonus catches the consumer’s attention, it may
not convey the desired message.
Bonus packs are costly because, additional amounts of product
sell for the same or a similar price.
Leon G. Schiffman & Leslie Lazar Kanuk “Consumer Behavior” 8th edition, Prentice Hall – 2006
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Types of Consumer Promotions ---
 Bonus
Packs: Effective use of Bonus Packs
1.
A retailer can build a good relationship with a
manufacturer that uses a bonus pack to increase brand
switching.
2.
Consumers like bonus packs because they get additional
product at the same price.
3.
Reduce brand switching at a minimal cost for existing
product.
Leon G. Schiffman & Leslie Lazar Kanuk “Consumer Behavior” 8th edition, Prentice Hall – 2006
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Types of Consumer Promotions ---
 Price-offs
encourage an display sales more not the actual product
A price-off is a temporary reduction in the price of a product to the consumer. It is not
on actual item but on a POP display, sign or shelf. It stimulates
1.
2.
Sales of an existing product.
Work well in the B2B area.
Leon G. Schiffman & Leslie Lazar Kanuk “Consumer Behavior” 8th edition, Prentice Hall – 2006
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Types of Consumer Promotions ---
 Price-offs:
Problems
1.
Too many price-off offers can create a detrimental impact on the firm’s image.
2.
It devastates for profit margins
Leon G. Schiffman & Leslie Lazar Kanuk “Consumer Behavior” 8th edition, Prentice Hall – 2006
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Types of Consumer Promotions ---
 Price-offs:
Effective use of price-offs
1.
It has an appeal of a monetary savings to consumers
2.
The reward is immediate
Leon G. Schiffman & Leslie Lazar Kanuk “Consumer Behavior” 8th edition, Prentice Hall – 2006
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Types of Consumer Promotions ---
 Specialties
1.
Items given free to consumers and other stakeholders to
help keep a brand’s name top-of-mind.
2.
These are normally low cost items, i.e. calendars, rulers,
coffee mugs, T-shirts, pens etc.
Basically non-profit organizations use specialties for
opening new facilities.
3.
Leon G. Schiffman & Leslie Lazar Kanuk “Consumer Behavior” 8th edition, Prentice Hall – 2006
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Types of Consumer Promotions ---
 Price
Reductions
1.
A featured price that is lower than regular price.
2.
Ex: Buy one get one free, 30 more for same price etc.
3.
Sometimes the retailers sacrifices some of its profits to
clear the stock.
Leon G. Schiffman & Leslie Lazar Kanuk “Consumer Behavior” 8th edition, Prentice Hall – 2006
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Ch. 13 Sales Promotion
Any Query
?
Leon G. Schiffman & Leslie Lazar Kanuk “Consumer Behavior” 8th edition, Prentice Hall – 2006
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Ch. 13 Sales Promotion
Thanks
---- for staying with me ----
Leon G. Schiffman & Leslie Lazar Kanuk “Consumer Behavior” 8th edition, Prentice Hall – 2006
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