Sales promotion - McGraw Hill Higher Education
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Chapter 16 Sales promotion Copyright 2012 McGraw-Hill Australia Pty Ltd PowerPoint Slides t/a Advertising and Promotion 2e by Belch, Belch, Kerr & Powell 16-1 Learning objectives 1. To understand the role of sales promotion in a company’s integrated marketing communication program and to examine why it is increasingly important. 2. To examine the various objectives of sales promotion programs. 3. To examine the types of consumer- and tradeoriented sales promotion tools and the factors to consider in using them. 4. To consider potential problems and abuse by companies in their use of sales promotion. Copyright 2012 McGraw-Hill Australia Pty Ltd PowerPoint Slides t/a Advertising and Promotion 2e by Belch, Belch, Kerr & Powell 16-2 Sales promotion abuse Scope and role Objectives Trade-oriented sales promotion Sales promotion Growth of sales promotion Techniques Consumer-oriented sales promotion Objectives Techniques Copyright 2012 McGraw-Hill Australia Pty Ltd PowerPoint Slides t/a Advertising and Promotion 2e by Belch, Belch, Kerr & Powell 16-3 Australia’s national dish Copyright 2012 McGraw-Hill Australia Pty Ltd PowerPoint Slides t/a Advertising and Promotion 2e by Belch, Belch, Kerr & Powell 16-4 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. A tool to speed up sales An extra incentive to buy Targeted to different parties Copyright 2012 McGraw-Hill Australia Pty Ltd PowerPoint Slides t/a Advertising and Promotion 2e by Belch, Belch, Kerr & Powell 16-5 Scope of sales promotion Sales promotion can be targeted at… Retailers Trade-oriented sales promotion Consumers Consumer-oriented sales promotion Copyright 2012 McGraw-Hill Australia Pty Ltd PowerPoint Slides t/a Advertising and Promotion 2e by Belch, Belch, Kerr & Powell 16-6 Sales promotion vehicles Consumer-oriented Samples Trade-oriented Contests, dealer incentives Coupons Premiums Trade allowances Contests/sweepstakes Point-of-purchase displays Refunds/rebates Training programs Bonus packs Trade shows Price-off deals Cooperative advertising Loyalty programs Event marketing Copyright 2012 McGraw-Hill Australia Pty Ltd PowerPoint Slides t/a Advertising and Promotion 2e by Belch, Belch, Kerr & Powell 16-7 Sony lives an innovative sales promotion Copyright 2012 McGraw-Hill Australia Pty Ltd PowerPoint Slides t/a Advertising and Promotion 2e by Belch, Belch, Kerr & Powell 16-8 Sales promotion for a tourist destination Copyright 2012 McGraw-Hill Australia Pty Ltd PowerPoint Slides t/a Advertising and Promotion 2e by Belch, Belch, Kerr & Powell 16-9 Sales promotion abuse Scope and role Objectives Trade-oriented sales promotion Sales promotion Growth of sales promotion Techniques Consumer-oriented sales promotion Objectives Techniques Copyright 2012 McGraw-Hill Australia Pty Ltd PowerPoint Slides t/a Advertising and Promotion 2e by Belch, Belch, Kerr & Powell 16-10 Sales promotion in Australia More than $6 billion is spent on promotions marketing annually. 81% of Australian consumers have purchased a product as a direct result of a promotion. Growth in sales promotion is expected as marketers become more adept at using viral marketing, email and other opt-in communications technologies. Copyright 2012 McGraw-Hill Australia Pty Ltd PowerPoint Slides t/a Advertising and Promotion 2e by Belch, Belch, Kerr & Powell 16-11 Sales promotion within IMC • Insert Figure 16.2 • Development of promotional strategy Copyright 2012 McGraw-Hill Australia Pty Ltd PowerPoint Slides t/a Advertising and Promotion 2e by Belch, Belch, Kerr & Powell 16-12 Growth of sales promotion Changing economic conditions Some reasons for growth Growing power of retailers Declining brand loyalty Increased promotional sensitivity Brand proliferation Fragmentation of consumer markets Short-term focus of marketers Increased accountability Need to penetrate the clutter Copyright 2012 McGraw-Hill Australia Pty Ltd PowerPoint Slides t/a Advertising and Promotion 2e by Belch, Belch, Kerr & Powell 16-13 Sales promotion—NZ Style Copyright 2012 McGraw-Hill Australia Pty Ltd PowerPoint Slides t/a Advertising and Promotion 2e by Belch, Belch, Kerr & Powell 16-14 The shifting role of the sales promotion agency Copyright 2012 McGraw-Hill Australia Pty Ltd PowerPoint Slides t/a Advertising and Promotion 2e by Belch, Belch, Kerr & Powell 16-15 Sales promotion abuse Scope and role Objectives Trade-oriented sales promotion Sales promotion Growth of sales promotion Techniques Consumer-oriented sales promotion Objectives Techniques Copyright 2012 McGraw-Hill Australia Pty Ltd PowerPoint Slides t/a Advertising and Promotion 2e by Belch, Belch, Kerr & Powell 16-16 Consumer-oriented sales promotion Identify target audiences Determine sales promotion objectives Obtain trial and repurchase Increase consumption Target a specific market segment Defend current customers Enhance IMC and build brand equity Set measurable goals Copyright 2012 McGraw-Hill Australia Pty Ltd PowerPoint Slides t/a Advertising and Promotion 2e by Belch, Belch, Kerr & Powell 16-17 Masterstrokes with MasterChef Copyright 2012 McGraw-Hill Australia Pty Ltd PowerPoint Slides t/a Advertising and Promotion 2e by Belch, Belch, Kerr & Powell 16-18 Schick uses sales promotion to encourage trial Copyright 2012 McGraw-Hill Australia Pty Ltd PowerPoint Slides t/a Advertising and Promotion 2e by Belch, Belch, Kerr & Powell 16-19 A new take on designer wear Copyright 2012 McGraw-Hill Australia Pty Ltd PowerPoint Slides t/a Advertising and Promotion 2e by Belch, Belch, Kerr & Powell 16-20 Packaged-goods manufacturers’ consumer promotions Copyright 2012 McGraw-Hill Australia Pty Ltd PowerPoint Slides t/a Advertising and Promotion 2e by Belch, Belch, Kerr & Powell 16-21 Sampling Sampling works best when The products are of relatively low unit value, so samples do not cost much The products are divisible and can be broken into small sizes that can reflect the product’s features and benefits Copyright 2012 McGraw-Hill Australia Pty Ltd PowerPoint Slides t/a Advertising and Promotion 2e by Belch, Belch, Kerr & Powell The purchase cycle is relatively short so the consumer can purchase in a relatively short time period 16-22 Sampling distribution Door-to-door Methods Direct mail In-store sampling On-package sampling Event sampling With magazine/newspaper Internet Other Copyright 2012 McGraw-Hill Australia Pty Ltd PowerPoint Slides t/a Advertising and Promotion 2e by Belch, Belch, Kerr & Powell 16-23 Bundle of baby products Copyright 2012 McGraw-Hill Australia Pty Ltd PowerPoint Slides t/a Advertising and Promotion 2e by Belch, Belch, Kerr & Powell 16-24 Coupons The oldest and most widely used sales promotion tool Coupons Used by virtually all packaged goods manufacturers Copyright 2012 McGraw-Hill Australia Pty Ltd PowerPoint Slides t/a Advertising and Promotion 2e by Belch, Belch, Kerr & Powell 16-25 Coupons (cont.) Copyright 2012 McGraw-Hill Australia Pty Ltd PowerPoint Slides t/a Advertising and Promotion 2e by Belch, Belch, Kerr & Powell 16-26 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 retailer’s cooperation Coupons are often used by loyal consumers who may purchase anyway Can be effective way to induce trial of new or existing products Can be way to defend market share and encourage repurchase Declining redemption rates and high costs of couponing Misredemption and fraud Copyright 2012 McGraw-Hill Australia Pty Ltd PowerPoint Slides t/a Advertising and Promotion 2e by Belch, Belch, Kerr & Powell 16-27 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 Copyright 2012 McGraw-Hill Australia Pty Ltd PowerPoint Slides t/a Advertising and Promotion 2e by Belch, Belch, Kerr & Powell 16-28 McDonald’s Happy Meals Copyright 2012 McGraw-Hill Australia Pty Ltd PowerPoint Slides t/a Advertising and Promotion 2e by Belch, Belch, Kerr & Powell 16-29 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 closest 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. Copyright 2012 McGraw-Hill Australia Pty Ltd PowerPoint Slides t/a Advertising and Promotion 2e by Belch, Belch, Kerr & Powell 16-30 Problems with contests and sweepstakes Do not contribute to brand building Problems Focus not on brand Effectiveness Legal considerations May generate negative publicity Use by professionals or hobbyists Copyright 2012 McGraw-Hill Australia Pty Ltd PowerPoint Slides t/a Advertising and Promotion 2e by Belch, Belch, Kerr & Powell 16-31 Strategies for improved return on promotions 1. Offer a popular grand prize. 2. Ensure that there is a good perceived chance of winning. 3. Give more than one prize. 4. Have intermittent prize draws. 5. Make it easy to participate. 6. Make it easy to understand. 7. Give instant gratification. 8. Give prizes of interest. 9. Communicate effectively. 10. Focus on the promotion, not the brand. Copyright 2012 McGraw-Hill Australia Pty Ltd PowerPoint Slides t/a Advertising and Promotion 2e by Belch, Belch, Kerr & Powell 16-32 Other popular consumer sales promotion tools Bonus packs Refunds and rebates Other promotional tools Event marketing Price-off deals Frequency/ loyalty programs Copyright 2012 McGraw-Hill Australia Pty Ltd PowerPoint Slides t/a Advertising and Promotion 2e by Belch, Belch, Kerr & Powell 16-33 Loyalty programs Copyright 2012 McGraw-Hill Australia Pty Ltd PowerPoint Slides t/a Advertising and Promotion 2e by Belch, Belch, Kerr & Powell 16-34 Event marketing Event marketing: promotion where a company or brand is linked to an event or where a themed activity is developed for the purpose of creating experiences for consumers and promoting a product or service. Event sponsorship: an IMC activity where a company develops actual sponsorship relations with a particular event and provides financial support in return for the right to display a brand name, logo or advertising message and be identified as a supporter of the event. Copyright 2012 McGraw-Hill Australia Pty Ltd PowerPoint Slides t/a Advertising and Promotion 2e by Belch, Belch, Kerr & Powell 16-35 Summary of consumer-oriented promotions and market objectives Copyright 2012 McGraw-Hill Australia Pty Ltd PowerPoint Slides t/a Advertising and Promotion 2e by Belch, Belch, Kerr & Powell 16-36 Sales promotion abuse Scope and role Objectives Trade-oriented sales promotion Sales promotion Growth of sales promotion Techniques Consumer-oriented sales promotion Objectives Techniques Copyright 2012 McGraw-Hill Australia Pty Ltd PowerPoint Slides t/a Advertising and Promotion 2e by Belch, Belch, Kerr & Powell 16-37 Trade-oriented sales promotion objectives Obtain distribution of new products Maintain trade support for existing products Objectives Build retail inventories Encourage retailers to display existing brands Copyright 2012 McGraw-Hill Australia Pty Ltd PowerPoint Slides t/a Advertising and Promotion 2e by Belch, Belch, Kerr & Powell 16-38 Types of trade-oriented promotions Contests and incentives Trade allowances Buying Buying allowances Allowances Point-of-purchase displays Promotional Promotional Allowances allowances Sales training programs Trade shows Slotting Slotting allowances Allowances Cooperative advertising Copyright 2012 McGraw-Hill Australia Pty Ltd PowerPoint Slides t/a Advertising and Promotion 2e by Belch, Belch, Kerr & Powell 16-39 Types of trade promotion Copyright 2012 McGraw-Hill Australia Pty Ltd PowerPoint Slides t/a Advertising and Promotion 2e by Belch, Belch, Kerr & Powell 16-40 Types of cooperative advertising Ingredientsponsored coop advertising Horizontal cooperative advertising Cooperative advertising Vertical cooperative advertising Copyright 2012 McGraw-Hill Australia Pty Ltd PowerPoint Slides t/a Advertising and Promotion 2e by Belch, Belch, Kerr & Powell 16-41 The sales promotion trap Copyright 2012 McGraw-Hill Australia Pty Ltd PowerPoint Slides t/a Advertising and Promotion 2e by Belch, Belch, Kerr & Powell 16-42 Summary and conclusions Over the past two decades, marketers have been allocating increased share of promotional budget to sales promotion. Sales promotion techniques can be: consumer oriented trade oriented. Sales promotion techniques include sampling, coupons, premiums, competitions, rebates and refunds. Sales promotion abuse can occur when marketers become overly dependent on sales promotion techniques at the expense of building long-term brand position, brand equity and customer relationships. Copyright 2012 McGraw-Hill Australia Pty Ltd PowerPoint Slides t/a Advertising and Promotion 2e by Belch, Belch, Kerr & Powell 16-43
