16
Sales Promotion
McGraw-Hill/Irwin
Copyright © 2009 by The McGraw-Hill Companies, Inc. All rights reserved.
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
Sales Promotion Vehicles
Consumer-Oriented
Trade-Oriented
Samples
Contests, incentives
Coupons
Trade allowances
Premiums
Point-of-purchase displays
Contests/sweepstakes
Training programs
Refunds/rebates
Trade shows
Bonus Packs
Cooperative advertising
Price-off deals
Frequency programs
Event marketing
• Consumer promotion $350 Billion
• Trade promotion $150 Billion
• 60 to 75% of budget on sales
promotion
• Trade promotion 50% of package
goods 27% to consumer promotion
San Diego Padres Boost Attendance
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Long-Term Budget Allocations
100%
90%
80%
70%
60%
Consumer Promotions
Media Advertising
50%
40%
30%
20%
Trade Promotions
10%
0%
‘94 ‘95 ‘96 ‘97 '98 ‘99 ‘00 ‘01 ‘02 ‘03 ‘04 ‘05
% of Total Promotional Dollars, 3-yr Moving Average
Media Often Delivers a Promotion Message
Sales Promotion Increases
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
Consumer Franchise-Building Promotions
Promotional Objectives
Communicate
distinctive brand
attributes
Develop and
reinforce brand
identity
Build long-term
brand preference
Techniques and Practices
“Frequency”
programs
encourage
repeat purchase
Sweepstakes &
contests to build
equity, increase
involvement
Premium offers
that reinforce the
brand image and
help build equity
Nonfranchise-Building Promotions
Objectives
Accelerate the
purchase decision
process
Generate an
immediate sales
increase
Limitations
Do not identify
unique brand
features
Do not contribute
to brand identity
or image
Contests Can Build Brand Equity
Nonfranchise-Building Promotions
May Include . . .
Price-off deals
Bonus packs
Rebates or
refunds
Shortcomings
Trade promotions
benefits may not
reach customers
If they do, they
may lead only to
price reductions
Customers may
“buy price”
rather than
brand equity
Objectives of Consumer-Oriented Promotions
To increase
consumption of
an established
brand
To obtain trial
and purchase
Objectives
Enhance IMC
efforts and build
brand equity
To defend
(maintain)
current
customers
To target a
specific segment
Sampling
Sampling Works Best When
The products
are of relatively
low unit value
The product can
be broken into a
small piece or size
that reflects the
full features and
benefits
The purchase
cycle is
relatively short
Sampling Methods
Door-to-door
Methods
Direct mail
In-store
On package
Event
Newspaper/magazine insert
Internet sites
Distributing Samples With Newspapers
Armor All Uses On-Package Samples
Couponing
The
oldest and
most widely used
sales promotion tool
Nearly
240 billion
distributed each
year in the US
85% of
consumers
use coupons;
21% use them regularly
Pros and Cons of Coupons
Advantages
Disadvantages
Appeals to price sensitive
consumer
Hard to tell how many
consumers use them and
when
Can offer price break
without retailers co-op
Often used by loyal
consumers who may
purchase anyway
Effective way to induce
trial of products
Declining redemption rates
and high costs of
couponing
Can be way to defend
market share and
encourage repurchase
Misredemption and fraud
Coupons are Most Often Used With…
Disposable
Diapers
Cereal
Laundry
Soap
Coupon Distribution
Other
Magazines
In / On Pack
Direct Mail
Newspaper Coop
Newspaper ROP
Freestanding
Inserts
The Most Popular Coupons are FSIs
Coupon Redemption Rates
Valpak Enhances Value of Coupons
Types of Coupons
In/on-pack
In-store
Bounce-back
Tear-off pads
Cross-ruff
Handouts
Instant
Dispensers
Register printout
Coupons are Available Electronically
Premiums
An offer of an item, merchandise, or
service, free or at a low cost, that is
an extra incentive for customers
Types of Premiums
Free:
Only requires purchase
of the product
Self-liquidating:
consumer required to
pay some or all of the
cost of the premium
Airline Miles are a Popular Incentive
More Consumer-Oriented Promotions
Contests and
sweepstakes
Refunds and
rebates
Bonus packs
Loyalty programs
Price-off Deals
Event marketing
Trade Oriented Promotions
Objectives
Obtain distribution for new
products
Maintain support for
established brands
Encourage display of
products
Build retail inventories
Types of Trade Oriented Promotions
Contests and incentives
Types
Co-op Advertising
Trade allowances
POP displays
Sales training
Trade shows
Buying
Promotional
Slotting
Coordinating Sales, Advertising, IMC Tools
Budget
allocation
Coordination of
themes
Media support
and timing
Problems With Sales Promotion
Aspects of Consumer Promotions
Economic
Informative
Affective
