16
Sales Promotion
McGraw-Hill/Irwin
Copyright © 2012 McGraw-Hill Companies, Inc., All right reversed
Sales Promotion
A direct inducement that offers
an extra value or incentive for
the product to the sales force,
distributors, or ultimate consumer
with the primary objective of
creating an immediate sale
16-2
Corn Flakes Premium Offer
16-3
Sales Promotion Vehicles
Consumer-Oriented
Trade-Oriented
Samples
Contests, incentives
Coupons
Trade allowances
Premiums
POP displays
Contests/sweepstakes
Sales training programs
Refunds/rebates
Trade shows
Bonus Packs
Cooperative advertising
Price-off deals
Frequency programs
Event marketing
16-4
Media Often Delivers a Promotion Message
Football
challenge
sweepstakes,
referral to
website
16-5
Reasons for Sales Promotion Increases
Growing power of retailers
Declining brand loyalty
Increased promotional sensitivity
Brand proliferation
Fragmented consumer markets
Short-term focus of marketers
Increased accountability
Competition
Clutter
16-6
Sale Promotion Concerns
• Negative impact of sales promotions
• Fewer dollars to build brand equity
• Encourages consumers to purchase on
the basis of price
• Detracts from the value of the brand
16-7
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
promote repeat
purchase
Sweepstakes &
contests build
equity, increase
involvement
Premium offers
that reinforce
brand image &
build equity
16-8
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
16-9
Objectives of Consumer-Oriented Promotions
Increase
consumption of an
established brand
Obtain trial
and purchase
Defend (maintain)
current customers
Enhance IMC
efforts and build
brand equity
Target a
specific segment
16-10
Targeting Specific Consumers
16-11
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
16-12
“Free Fryday” Promotion
16-13
Sampling Methods
Door-to-door
Methods
Direct mail
In-store
On package
Events
Newspaper/magazine insert
Other methods
16-14
Sampling
Sampling Works
Best When
Products are of
relatively low
unit value, so
samples don’t
cost much
Products are
divisible and can
be broken into
small sizes that
reflect the
products features
and benefits
Purchase cycle
is relatively
short so the
consumer can
soon purchase
again
16-15
Samples are Often Distributed With Newspapers
16-16
Armor All Uses On-Package Samples
16-17
Couponing
The
oldest and
most widely
used
sales
promotion
tool
85% of
consumers
use
coupons;
21% use
them
regularly
Nearly
240 billion
distributed
each year
in the US
16-18
Pros and Cons of Coupons
Advantages
Disadvantages
Appeals to price
sensitive consumers
Hard to tell how many
consumers will use
them and when
Can offer discounts
without retailer
cooperation
Effective way to induce
trial of products
Defends market share
and encourages
repurchase
Often used by loyal
consumers who would
purchase anyway
Low redemption rates
and high costs
Misredemption
and fraud
16-19
Most Often Used Coupons
Disposable
Diapers
Cereal
Laundry
Soap
16-20
Coupon Misredemption and Fraud
• Customer redemption for a product or
size not specified on the coupon
• Salesclerk redemption of coupons for cash
• Store managers gathering and redeeming
coupons without the accompanying sale
• Criminals gather or print coupons and sell
them to unethical merchants
• Web-source fraud, whereby coupons are
produced and distributed online
16-21
Coupon Distribution
• In order of usage
• Freestanding inserts (86%)
• In-store couponing (6%)
• Direct mail (2%)
• Magazines (2%)
• Newspapers (1%)
• Coupons inside/outside product (1%)
• Other methods (2%)
16-22
FSIs are the Most Popular Coupon Type
16-23
Coupon Redemption Rates
16-24
Valpak Enhances Value of Coupons
16-25
Types of Coupons
In/On-Pack
In-Store
Bounce-back
Tear-off pads
Cross-ruff
Handouts
Instant
Dispensers
Register printout
16-26
Cross-Ruff Coupons
16-27
Coupons are Available Electronically
16-28
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
16-29
Airline Miles are a Popular Incentive
16-30
More Consumer-Oriented Promotions
Price-off Deals
Contests and
sweepstakes
Refunds and
rebates
Bonus packs
Loyalty programs
Event marketing
16-31
Contests and Sweepstakes
Sweepstakes
Promotion where winners are
determined purely by chance
Cannot require proof of purchase
as a condition for entry
Winners chosen by random selection from
pool of entries or generation of a number
to match those held by game entrants
Consumers compete for prizes or money
on the basis of skills or ability
Contest
Winners determined by judging entries
or ascertaining which entry is closest
to predetermined criteria
16-32
Problems With Contests and Sweepstakes
Little consumer franchise building
Focus on contest/sweepstakes, not brand
Effectiveness
Negative publicity
Federal regulations
Use by professionals or hobbyists
16-33
Trade Oriented Promotions
Objectives
Obtain distribution for new
products
Maintain support for
established brands
Encourage display of
products
Build retail inventories
16-34
Types of Trade Oriented Promotions
Contests and incentives
Types
Co-op Advertising
Trade allowances
POP displays
Buying
Sales training
Promotional
Trade shows
Slotting
16-35
Cooperative Advertising
• Trade-oriented cooperative advertising
• The cost of advertising is shared by more
than one party
• Forms
• Horizontal
• Ingredient-sponsored
• Vertical
16-36
Types of Cooperative Advertising
Horizontal
Cooperative
Advertising
IngredientSponsored
Coop Advertising
Cooperative
Advertising
Vertical
Cooperative
Advertising
16-37
Promotion Agencies’ Shifting Role
Traditional
New and Improved
Created tactics
Creates strategy
Do single project
Continuing service
Hired for specialty
One full-service firm
Single agency contact
Agency team contact
Inferior to ad agency
Equal to ad agency
Indirect accountability
Directly accountable
16-38
Coordinating Sales, Advertising, IMC Tools
Budget
allocation
Coordination of
themes
Media support
and timing
16-39
Sales Promotion Abuse
• Over-use of sales promotions
• Looking for quick sales fixes
• Easier to drop prices than to differentiate
your product
• Negative impact
• A brand that is constantly promoted
may lose perceived value
• Purchases based on discounts, not a
favorable attitude
• Sales promotion trap or spiral
16-40
The Sales Promotion Trap
16-41