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CHAPTER
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Using Effective
Promotional
Techniques
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McGraw-Hill/Irwin
Understanding Business, 8e
McHugh
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McHugh
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© 2008 The McGraw-Hill Companies, Inc., All Rights Reserved.
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Traditional Promotional Mix
Advertising
Personal
Selling
Product
Public
Relations
Sales
Promotion
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Steps In A
Promotional Campaign
1. Identify the target market
2. Define the objectives
3. Determine the promotional budget
4. Develop a unifying message
5. Implement the plan
6. Evaluate effectiveness
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I. PROMOTION AND THE PROMOTION MIX
Learning goal 1
Define promotion and list the four traditional tools that make
up the promotion mix.
II. ADVERTISING: FIGHTING TO KEEP CONSUMER
INTEREST
Learning goal 2
Define advertising and describe the advantages and
disadvantages of various advertising media, including the
Internet.
The Growing Use of Infomercials
Advertisers Are Moving to the Internet
Global Advertising
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III. PERSONAL SELLING: PROVIDING PERSONAL
ATTENTION
Learning goal 3
Illustrate the steps of the B2B and B2C selling processes.
Steps in the Selling Process
The Business-to-Consumer (B2C) Sales Process
IV. PUBLIC RELATIONS: BUILDING RELATIONSHIPS
Learning goal 4
Describe the role of the public relations department, and tell
how publicity fits in that role.
Publicity: The Talking Arm of PR
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V. SALES PROMOTION: GETTING A GOOD DEAL
Learning goal 5
Explain the importance of various forms of sales promotion,
including sampling.
Sampling
Word of Mouth
How New Technologies Are Affecting Promotion
VI. MANAGING THE PROMOTION MIX:
PUTTING IT ALL TOGETHER
Learning goal 6
Give examples of word of mouth, viral marketing, blogging,
and podcasting.
Promotional Strategies
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PROMOTION AND THE PROMOTION MIX
Learning goal 1
PROMOTION
is an effort by marketers to inform and remind people in the target
market and about products and to persuade them to participate in the
exchange.
These tools include advertising, personal selling, public relations, and
sales promotion.
The combination of promotional tools an organization uses is called its
PROMOTION MIX.
INTEGRATED MARKETING COMMUNICATION (IMC)
is a technique that combines all the promotional tools into one
comprehensive and unified promotional strategy.
Recently, companies have added INTERNET PROMOTIONS to the mix.
All promotional tools and company resources are used to build better
relationships with customers.
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Advertising
• Advertising media: Newspaper,
television, radio, magazines,
outdoor, direct mail, yellow-pages,
Internet
• The growing use of Infomercials
• Moving to the Internet
• Global advertising
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II. ADVERTISING: FIGHTING TO KEEP CONSUMER
INTEREST
Learning goal 2
ADVERTISING
is paid, non-personal communication through various media by
organizations and individuals who are in some way identified in
the advertising message.
PROPAGANDA is nonpersonal communication that
DOES NOT HAVE AN IDENTIFIED SPONSOR.
Total ad volume exceeds $245 billion yearly.
TELEVISION is the number one advertising medium in terms
of total dollars spent.
DIRECT MAIL is number two, with NEWSPAPERS a close
third.
In 2005, INTERNET ADVERTISING increased 15.7% over the
previous year.
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The public BENEFITS FROM ADVERTISING:
Advertising is INFORMATIVE–it provides information about
products, prices, features, and so on.
Advertising provides us with FREE TV AND RADIO
PROGRAMS, because advertisers cover most of the
production costs.
Advertising costs cover the major costs of producing
newspapers and magazines.
Newspapers, radio, and the Yellow Pages are especially
attractive to LOCAL ADVERTISERS.
TV has many advantages to national advertisers, but it is
expensive.
However, few other media can REACH AS MANY
PEOPLE with such impact.
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PRODUCT PLACEMENT
is putting products into TV shows and movies where they
will be seen.
Marketers must choose which media and which programs
will best reach the audience they desire.
RADIO ADVERTISING
is less expensive than TV advertising and often reaches
people when they have few distractions.
The glut of commercials on radio has driven some people to
COMMERCIAL-FREE RADIO
such as Sirius or XM.
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THE GROWING USE OF INFOMERCIALS
An INFOMERCIAL is a full-length TV program devoted exclusively to
promoting goods and services.
They are so successful because they show the product in great detail.
A half-hour infomercial is the equivalent of sending your best salespeople into a
person’s home.
Some products, such as work-out tapes, are hard to sell without showing
testimonials.
ADVERTISERS ARE MOVING TO THE INTERNET
Digital video recorders (DVRs) let consumers skip the ads on TV, making TV less
attractive to advertisers.
.Some advertisers are putting their ads online.
Marketers can reach customers as they are researching their product through
advertising on popular online sites.
If users click through an ad to the Web site, the company gets to interact with the
customer.
The goal is to GET CUSTOMERS AND POTENTIAL CUSTOMERS TO A
WEB SITE where they can learn more about the company and its products.
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INTERACTIVE PROMOTION
is a promotion process that allows marketers to go beyond a
monologue, where sellers tried to persuade buyers to buy things, to
a dialogue in which buyers and sellers can work together to create
mutually beneficial exchange relationships.
TECHNOLOGY
has improved the speed and potential of Internet dialogues.
The current trend in Internet marketing is to
BUILD RELATIONSHIPS with customers over time.
Advertisers can track how many people click through the
commercial and what Web sites they read and watch.
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GLOBAL ADVERTISING
refers to developing a product and promotional strategy that can be
implemented worldwide.
Because of differences in culture, language, and buying habits,
promotional efforts designed specifically for individual countries
may work best.
Getting the words right in international advertising is critical, but
tricky.
.International advertising calls for researching
THE WANTS AND NEEDS OF PEOPLE in each country.
Even in the U.S., selected groups are large enough and different
enough to call for specially designed promotions.
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Advertising today is evolving from
GLOBALISM (one ad for everyone in the world) to
REGIONALISM (specific ads for each country or for specific
groups within a country.)
III. PERSONAL SELLING: PROVIDING PERSONAL
ATTENTION
Learning goal 3
PERSONAL SELLING
is the face-to-face presentation and promotion of products
and services.
It also involves searching out prospects and providing followup service after the sale.
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Effective selling today is more than persuading others to buy;
it is helping them to SATISFY THEIR WANTS AND NEEDS.
Salespeople now use TECHNOLOGY, such as the Internet,
portable computers, and fax machines, to help customers and
to complete the sale.
Because personal attention for customers is expensive, some
companies are REPLACING SALESPEOPLE WITH
INTERNET SERVICES.
Nearly 10% of the total labor force is employed in personal
selling, and the demand for salespeople is rapidly increasing.
Over 7 million people are employed in sales.
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Seventy-seven percent of companies are hiring more field
sales representatives.
Top sellers can make more than their direct supervisor.
The average cost of a single sales call to a potential B2B
buyer is about $400.
STEPS IN THE SELLING PROCESS
CONSUMER RELATIONSHIP MANAGEMENT (CRM) is
becoming critically important to establishing long-term
relationships with customers.
The text uses the example of a software salesperson.
The selling process for B2B and for consumer products is
similar.
In both, it is critical for the salesperson to know the product
well and know how the product compares to those of
competitors.
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STEP 1: PROSPECT AND QUALIFY
PROSPECTING
involves researching potential buyers and choosing those
most likely to buy.
QUALIFYING
is making sure that people have the NEED for a product, the
AUTHORITY to buy, and the WILLINGNESS to listen to a
sales message.
A person who meets these criteria is the PROSPECT.
The best prospects are people recommended by existing
customers.
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STEP 2: PREAPPROACH
Before making a sales call, sales representatives must do further
RESEARCH to learn as much as possible about customers and their
wants and needs. All this information should be in a DATABASE.
Gathering information before the sale takes place is critical.
STEP 3: APPROACH
You don’t have a second chance to make a FIRST IMPRESSION.
The approach should give an impression of friendly professionalism
to create rapport, to build credibility, and to start a relationship.
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STEP 4: MAKE PRESENTATION
The idea is to match the benefits of your value package to the client’s
needs. CRM software provides technical tools to tailor the
presentation.
This is a good time to use TESTIMONIALS.
STEP 5: ANSWER OBJECTIONS
A salesperson should ANTICIPATE POTENTIAL OBJECTIONS
and determine proper responses.
Questions should be viewed as opportunities for creating better
relationships.
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STEP 6: CLOSE SALE
The TRIAL CLOSE
is a step in the selling process that consists of a question or
statement that moves the selling process toward the actual close.
The final step is to ASK FOR THE ORDER.
Salespeople must close many times before a long-term relationship
is established.
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STEP 7: FOLLOW UP
The selling process isn’t over until the order is approved and the
customer is happy.
Selling goes beyond simply sales—it includes ESTABLISHING
RELATIONSHIPS, not just selling goods and services.
FOLLOW-UP includes handling customer complaints, making sure
that the customer’s questions are answered, and supplying what the
customer wants.
Often, customer SERVICE is as important to the sale as the product
itself.
The SELLING PROCESS VARIES somewhat among different
goods and services, but the general idea is the same.
The goal is to help the buyer buy and make sure the buyer is
satisfied after the sale.
SALES FORCE AUTOMATION (SFA) includes software
programs that help salespeople design products, close deals, tap into
intranets, and more.
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Steps in the Selling
Process (B2B)
1.
2.
3.
4.
5.
6.
7.
Prospect and Qualify
Preapproach
Approach
Make Presentation
Answer Objections
Close Sale
Follow Up
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THE BUSINESS-TO-CONSUMER (B2C) SALES PROCESS
B2C selling differs from B2B selling.
In B2C SALES, the salesperson does not have to do as much
prospecting or qualifying.
Retail salespeople don’t usually have to go through a preapproach
step.
The first formal step in the B2C process is the APPROACH.
Don’t say “May I help you;” instead “What can I help you with?”
After the initial approach, a salesperson then
MAKES A PRESENTATION to show customers how the
company’s products meet their needs.
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Steps in the
Selling Process (B2C)
Follow up
Close sale
Make presentation
Start
Ask questions
Approach
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Next, answer customer’s questions to help them choose the
products that are right for them.
In B2C selling, it is important to make a TRIAL CLOSE, walking
a fine line between being helpful and being pushy.
AFTER-SALE FOLLOW-UP
is an important but often neglected step in B2C sales.
IV. PUBLIC RELATIONS:
BUILDING RELATIONSHIPS WITH ALL PUBLICS
Learning goal 4
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PUBLIC RELATIONS (PR)
is the management function that evaluates public attitudes,
changes policies and procedures in response to the public’s
requests, and executes a program of action and information to
earn public understanding and acceptance.
A GOOD PUBLIC RELATIONS PROGRAM HAS
THREE STEPS:
LISTEN TO THE PUBLIC: start with good marketing research.
CHANGE POLICIES AND PROCEDURES: listen to what
customers want.
INFORM PEOPLE that you’re being responsive to their needs.
The public relations department has responsibility for
MAINTAINING CLOSE RELATIONSHIPS with the media,
community leaders, government officials, and other stakeholders.
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PUBLICITY: THE TALKING ARM OF PR
PUBLICITY
is any information about an individual, product, or an
organization that is distributed to the public through the media,
and that’s not paid for or controlled by the sponsor.
PRESS RELEASES must be carefully written so the media will
publish them.
Publicity works only if the media finds the material interesting or
newsworthy.
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ADVANTAGES OF PUBLICITY:
Publicity is FREE.
Publicity may reach people who wouldn’t read an ad The greatest
advantage of publicity may be its BELIEVABILITY.
DISADVANTAGES OF PUBLICITY include:
Marketers HAVE NO CONTROL over how, when, or if the
media will use the story.
Media DOES NOT HAVE TO PUBLISH IT.
The story can be ALTERED so it’s not positive.
There GOOD PUBLICITY and there is BAD PUBLICITY.
Stories are NOT LIKELY TO BE REPEATED; advertising can
be repeated as often as needed.
To see that publicity is handled well by the media, the marketer
should establish a
FRIENDLY RELATIONSHIP WITH THE MEDIA and
cooperate with them.
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Public Relations
Steps
Publicity
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Listen to the public.
• Free
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Change policies and
procedures.
• More Effective Than
Advertising
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Inform people that
you’re being
responsive to their
needs.
• Believable
• No Control
• No Repetition
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Sales Promotion
• Internal & External
• Sampling
• Word-Of-Mouth
• Viral Marketing/Swag
• Blogging
• Podcasting
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SALES PROMOTION
is the promotional tool that
stimulates consumer purchasing and dealer interest by means of
short-term activities.
Examples of consumer sales promotions include free samples,
cents-off coupons, and prizes.
Sales promotion programs are designed to SUPPLEMENT
personal selling, advertising, and public relations by creating
enthusiasm for the overall promotional program.
INTERNAL SALES PROMOTIONS (within company) generate
employee enthusiasm about a product, including:
Sales training
Development of sales aids such as flip charts, portable audiovisual
displays, and videotapes
Participation in trade shows
to PROMOTE TO FINAL CONSUMERS
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EXTERNAL SALES PROMOTION
(outside company, including distributors and dealers):
It is important to get distributors and dealers involved so they, too,
are enthusiastic.
Trade shows are important because buyers are able to see products
from many different sellers.
Virtual trade shows—trade shows on the Internet—enable buyers
to see many products without leaving the office.
The next step is to PROMOTE TO FINAL CONSUMERS
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Techniques include samples, coupons, cents-off deals, displays, contests, rebates,
and so on.
Sales promotion is an ongoing effort to maintain enthusiasm.
SAMPLING
is a promotional tool in which a company lets consumers have a small sample of a
product for no charge.
Using sampling in GROCERY STORES is a quick, effective way of
demonstrating a product’s superiority at the time consumers are making a
purchase decision.
Companies use sampling in conjunction with other techniques such as
EVENT MARKETING.
The text uses the example of Pepsi’s introduction of Fruit Works.
WORD-OF-MOUTH
is one of the most effective promotional tools.
WORD OF MOUTH PROMOTION is a promotional tool that involves people
telling other people about products they have purchased.
Anything that encourages people to talk favorably about an organization is
effective word of mouth.
Clever commercials and samples can generate word of mouth.
VIRAL MARKETING AND OTHER WORD-OF-MOUTH STRATEGIES
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Some companies have begun creating word-of-mouth by paying people
to go online and hype the product in chat rooms.
These people get free tickets, T-shirts, and other merchandise that the
industry calls SWAG.
VIRAL MARKETING
is the term now used to describe everything from paying people to say
positive things on the Internet to setting up multilevel selling schemes
whereby consumers get commissions for directing friends to specific
Web sites.
An effective strategy for spreading word of mouth is to send
TESTIMONIALS to current customers.
These are effective in confirming customers’ belief that they chose the
right company and are effective in promotion to new customers.
But negative word of mouth can hurt a firm.
Upset customers are now publishing their complaints on the Internet.
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BLOGGING
A BLOG is an online diary (Web log) that looks like a web page but is
easier to create and update by posting text, photos, or links to other
sites.
There are over 9 million blogs currently on the Internet.
Business information will be revolutionized by bloggers.
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SOME EXAMPLES:
SmallBusinesses.blogspot.com (for small business trends.)
CoolBusinessideas.blogspot.com (for cool business ideas.)
PODCASTING
PODCASTING is a means of distributing audio and video programs via the
Internet that lets users subscribe to a number of files, also known as feeds, and
then hear or view the material at the time they choose.
The name is a combination of “iPod” and “broadcasting.”
Podcasting gives broadcast radio or television programs a new distribution
method.
TRADITIONAL PROMOTIONAL methods are slowly but surely being
replaced by new technology.
HOW NEW TECHNOLOGIES ARE AFFECTING PROMOTION
As people purchase goods and services on the Internet, companies keep track of
these purchases and GATHER FACTS about these customers.
Using this information companies are able to design catalogs and brochures
specifically to MEET INDIVIDUAL CUSTOMER NEEDS.
Companies are spending more on direct
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MANAGING THE PROMOTION MIX: PUTTING IT ALL TOGETHER
Learning goal 6
Each target group calls for a separate promotion mix.
Large, homogenous groups of consumers are most efficiently reached
through ADVERTISING.
Large organizations are best reached through PERSONAL SELLING.
SALES PROMOTION motivates people to buy now rather than later.
PUBLICITY adds support to the other efforts and can create a good
impression.
WORD OF MOUTH is often the most powerful promotional tool; often
including blogs and podcasting.
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Objectives of
Integrated Marketing
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•
•
•
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Build Brand Equity
Provide Information
Manage Demand & Build Sales
Differentiate Products
Influence Perceptions, Attitudes, &
Buyer Behavior
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In a PUSH STRATEGY,
the producer uses advertising, personal selling, sales promotion, and
all other promotional tools to convince wholesalers and retailer to stock
and sell merchandise.
In a PULL STRATEGY,
heavy advertising and sales promotion efforts are directed toward
consumers so they will request the products from retailers.
A company can use BOTH push and pull strategies at the same time.
The latest in pull and push strategies are being conducted on the
INTERNET.
It is important to make promotion part of a TOTAL SYSTEMS
APPROACH to marketing.
Thus, promotion would be an integral part of supply chain efforts.
The idea would be to develop a TOTAL PRODUCT OFFER to
appeal to everyone: manufacturers, distributors, retailers, and consumers.
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Century’s
Top Ad Jingles
• “You deserve a
• “I wish I were an Oscar
break today”
Mayer wiener”
• “Be all you can be” • “A little dab’ll do ya”
• “Pepsi-Cola hits the • “Double your pleasure,
spot”
double your fun”
• “Mm Mm good!”
• “It’s the real thing”
• “See the USA in
your Chevrolet”
• “Winston tastes good
like a cigarette should”
Source: Advertising Age
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Do Blatantly Sexy
Ads Turn You Off?
Percent
Men
80
70
60
50
40
30
20
10
0
Women
72
51
45
4
24
Strongly/Somewhat
Agree
Strongly/Somewhat
Disagree
4
Don't Know
Source: USA Today
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Total Direct
Advertising Expenditures
300
263.7
231.4
250
200
150
271
142.1
153
1996
1997
164.1
100
50
0
Source: The Direct Marketing Association, Advertising Age (accessed August 10, 2006)
1998
2002
2004
2005
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Money Spent to
Place Products
$4.5
$4.0
$3.5
$3.0
$2.5
$2.0
$1.5
$1.0
$0.5
$0.0
$4.1
$3.4
$2.5
$2.0
$2.1
In Billions
2001
2002
2003
2004
2005
Source: PQ Media
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Total Advertising
Expenditures By Media
Network TV
$18,036
Magazine
$9,527
Cable TV network
$8,912
Local Newspaper
$6,499
Spot TV
$5,328
Internet
$2,652
Syndicated TV
$2,623
$0
Source: Advertising Age, 2005
$5,000
Expenditures of 100 Leading
National Advertisers
$10,000
$15,000
$20,000
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Ad Spending Growth
Outdoor
Cable TV Network
Internet
Sunday Magazine
Local Magazine
0.0%
Source: Advertising Age, 2005
9.8%
11.0%
13.3%
13.7%
25.2%
5.0% 10.0% 15.0% 20.0% 25.0% 30.0%
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Infomercials Grossing
Over 1 Billion
Ron Popeil's
Rotisserie & BBQ
In Billions
George Foreman Grill
Soloflex
Total Gym
Bowflex
Proactiv
0
Source: Business 2.0, June 2005
0.5
1
1.5
2
2.5
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U.S. Online
Ad Spending
9
8
7
6
5
4
3
2
1
0
1998
1999
Source: Investors.com; Advertising Age, 2005
2000
2001
2002
2003
2004
2005
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Sales Promotion Techniques
B2B
B2C
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
Trade Shows
Portfolios
Deals
Catalogs
Conventions
Coupons
Cents-off Promotions
Sampling
Premiums
Sweepstakes
Contests
Bonuses
Catalogs
Demonstrations
Special Events
Lotteries
In-store Displays
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Tips on
Issuing Coupons
• Coupons can be used as a “Thank you for
buying” or a “Stop and try us.”
• The value must be enough to attract
customers.
• Use coupon promotions sparingly.
• Get professional help to get maximum
exposure.
• Color-code your coupons for different
groups that use them.
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Coupon Statistics
Average Face Value
• 93 cents (2004); 46 cents (1990)
Amount saved in 2004
• $2.9 billion
Number of coupons redeemed in America
in 2004
• 3 billion
Coupons rank 2nd as purchase motivators
(Largest: Free Samples)
Source: St. Louis Post-Dispatch Everyday, July 2005
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Putting it all Together
• Convince wholesalers and
retailers to stock and sell
• Producer uses advertising,
personal selling, sales
promotion to convince the
intermediaries
• Idea is to push the product
through the distribution
system to the stores
• Heavy advertisements and
sales promotion efforts
• Directed at consumers so
that they will request the
products from retailers
• Products are pulled down
through the distribution
system
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