Sales Promotion
© 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
Sales Promotion
“A direct inducement that offers an extra
value or incentive for the product to the sales
force, distributors, or the ultimate consumer
with the primary objective of creating an
immediate sale.”
An extra
incentive to buy
A tool to
speed up sales
Targeted to
different parties
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Sales Promotion Vehicles
Consumer-Oriented
Trade-Oriented
Samples
Contests, dealer incentives
Coupons
Trade allowances
Premiums
Point-of-purchase displays
Contests/sweepstakes
Training programs
Refunds/rebates
Trade shows
Bonus packs
Packs
Cooperative advertising
Price-off deals
Frequency
Loyalty programs
programs
Event marketing
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The San Diego Padres Use a Promotion to
Boost Attendance
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Media Advertising Often Delivers a
Promotion Message
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Reasons for Increase in Sales Promotion
Growing power of retailers
Reasons
Declining brand loyalty
Increased promotional sensitivity
Brand proliferation
Fragmentation of consumer markets
Short-term focus of marketers
Increased accountability
Competition
Clutter
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Consumer Franchise-Building (CFB) Promotions
CFB Promotional
Objectives
Communicate
distinctive brand
attributes
Develop and
reinforce brand
identity
Build long-term
brand preference
CFB Techniques and
Practices
“Frequency”
“Frequency”
programs that
programs
encourage repeat
encourage repeat
purchase and
purchase
loyalty
Contests
and,
“Frequency”
sweepstakes that
programs
increase
encourage
involvement and
patronage loyalty
help build equity
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Premium offers
that reinforce the
brand image and
help build equity
Sweepstakes Can Help Build Brand Equity
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Nonfranchise-Building (non-FB) Promotions
Non-FB Promotional
Objectives
Accelerate the
purchase decision
process
Generate an
immediate sales
increase
Non-FB Promotions . . .
Do not identify
unique brand
features
Do not contribute to
brand identity or
image
© 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
Nonfranchise-Building (non-FB) Promotions
Non-FB Promotions May
Include . . .
Price-off deals
Bonus packs
Rebates or
refunds
Non-FB Promotions
Shortcomings
Trade promotions
benefits may not
reach customers
If they do, they
may lead only to
price reductions
© 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
Customers may
“buy price” rather
than brand equity
Objectives of Consumer-Oriented
Sales Promotion
To increase
consumption of
an established
brand
brand
To obtain trial
and purchase
Objectives
Enhance IMC
efforts and build
brand equity
To defend
(maintain)
current
customers
To target a
specific segment
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50%
25%
0%
75%
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Other
Prepricing on package
Contests
Internet promotions
Sweepstakes
Electronic retail promotions
Premium offers
Money back offers/other refunds
Sampling established products
Sampling new products
Couponing in store
Couponing in retailers' ads
Cents-off promotions
Couponing consumer direct
Use of Consumer Promotions by
Package Goods Companies
100%
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
© 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
The purchase
cycle is
relatively short
so the
consumer can
purchase in a
relatively short
time period
Sampling Methods
Door-to-door
Methods
Direct mail
Central location distribution
In-store sampling
Cross-product sampling
Co-op package distribution
With newspaper/magazine
Event sampling
Internet sites
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Samples are Often Distributed With Local
Newspapers
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Armor All Uses an On-Package Sample
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Coupons
The
oldest and
most widely used
sales promotion tool
Nearly
260
240 billion
distributed each
year in the US
Coupons
80
percent of
consumers
use coupons and
25% use them regularly
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Advantages and Limitations of Coupons
Advantages
Disadvantages
Appeal to price sensitive
consumer
Difficult to determine how
many consumers will use
coupons and when
Can offer price break
without retailers coop
Coupons are often used by
loyal consumers who may
purchase anyway
Can be effective way to
induce trial of new or
existing products
Declining redemption rates
and high costs of
couponing
Can be way to defend
market share and
encourage repurchase
Misredemption and fraud
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Percent of Sales Made With Coupons for
Various Products
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%
© 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
Coupon Distribution
Other
Magazines
In / On Pack
Direct Mail
Newspaper Coop
Newspaper ROP
Freestanding
Inserts
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FSIs are the Most Popular Types of Coupons
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Coupon Redemption Rates
Instant On-Pack
Regular On-Pack
On-Shelf Distributed
In-Pack Cross-Ruff
Handout Electronically Dispensed
On-Pack Cross-Ruff
Instant On-Pack Cross-Ruff
Regular In-Pack
All Other Out-Store Handouts
Health & Beauty
Grocery
All Other In-Store Handouts
Direct Mail
Free Standing Inserts
Magazine
Newspaper
0%
5%
10%
15%
20%
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25%
30%
35%
40%
45%
Valpak’s Advertising Helps Enhance the
Value of Coupons
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Coupons Are Now Available Online
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Premiums
Premium: an offer of an item of
merchandise or service either free or
at a low cost that is an extra
incentive for customers
Two Types of Premiums
Free Premiums:
Only require purchase
of the product
Self-liquidating
Premiums: require
consumer to pay some
or all of the cost of the
premium
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Airline Miles are a Very Popular Premium
Incentive
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Contests and Sweepstakes
Contest: a promotion where consumers compete for
prizes or money on the basis of skills or ability. Winners
are determined by judging entries or ascertaining which
entry comes closes to some predetermined criteria
Sweepstakes/games: a promotion where winners are
determined purely by chance and cannot require a proof
of purchase as a condition for entry. Winners are chosen
by random selection from a pool of entries or generation
of a number to match those held by game entrants.
© 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
Problems With Contests and Sweepstakes
Little consumer franchise building
Problems
Focus on contest/sweepstakes, not brand
Effectiveness
Negative publicity
Federal regulations
Use by professionals or hobbyists
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Other Popular Consumer Sales Promotion Tools
Bonus Packs
Refunds and
Rebates
Other
Promotional
Tools
Event
Marketing
Price-off Deals
Frequency/
Loyalty
Programs
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Event Marketing
© 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
Summary of Consumer-Oriented Promotions and
Market Objectives
© 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
Trade-Oriented Sales Promotion Objectives
Maintain trade
support for existing
products
Obtain distribution of
new products
Objectives
Build retail
inventories
Encourage retailers
to display
existing brands
© 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
Types of Trade-Oriented Promotions
Contests and
Incentives
Trade Allowances
Buying
Allowances
Point-of-Purchase
Displays
Promotional
Allowances
Sales Training
Programs
Trade Shows
Cooperative
Advertising
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Slotting
Allowances
Types of Cooperative Advertising
Horizontal
Cooperative
Advertising
IngredientSponsored
Coop Advertising
Cooperative
Advertising
Vertical
Cooperative
Advertising
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“Intel Inside”- A Powerful Co-op Program
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