4550: Promotion Strategy I Professor Campbell 2/22/05.
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Transcript of 4550: Promotion Strategy I Professor Campbell 2/22/05.
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4550:Promotion Strategy I4550:Promotion Strategy I
Professor Campbell2/22/05
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Plan for the DayPlan for the Day
• Differences between advertising and promotions
• Types of sales promotions
• Consumer promotions– Objectives
– Types
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Sales PromotionSales Promotion
“A direct inducementthat offers an extra value
or incentive for the productto the sales force, distributors
or the ultimate consumerwith the primary objective
of creating animmediate sale.”
Louis J. Haugh
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What is Advertising?What is Advertising?
• “Non-personal forms of communication, conducted through paid media under clear sponsorship.”
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What is (Sales) Promotion?What is (Sales) Promotion?
• A short-term incentive designed to encourage earlier or stronger target response
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PromotionPromotion
• Three general types of promotions– Consumer
– Trade
– Salesforce
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Consumer Promotions: Objectives Consumer Promotions: Objectives
• What kinds of behavior can we influence?– What are the types of objectives that
suggest we should use promotions (versus other types of marcom)?
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Consumer Promotions: Objectives Consumer Promotions: Objectives
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Consumer Promotions: Objectives, cont… Consumer Promotions: Objectives, cont…
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Consumer Promotions: Objectives, cont… Consumer Promotions: Objectives, cont…
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Promotion OptionsPromotion Options
• There are many different forms of consumer promotions
• Choose:– to best meet current objectives
– with an eye toward longer-term effects on brand
• Set:– appropriate evaluation criteria
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SamplingSampling
• Advantages:
• Disadvantages:
• Usage
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Manufacturer’s CouponsManufacturer’s Coupons
• Advantages:+ Effective
+ Less expensive
+ Can be used to build equity
• Disadvantages:– “Response costs” lower redemption rate
• can be hard to predict
– Costs more than value of coupon
– “Slow”
– Mis-redemption
– Used by current users (+ and -)
– Often does not build equity
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Manufacturer’s Coupons, continuedManufacturer’s Coupons, continued• Usage
» New brand
» New users entering product category
» Price discrimination• Target is price sensitive, but not highly
time sensitive
» Switchers
» Increase purchase incidence (or timing) of brand loyals
» Get people to “trade up”
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FSI’s (Manufacturer’s Coupons, cont…)FSI’s (Manufacturer’s Coupons, cont…)• Headline
– Price-based
– Brand-based
• Product Display
• Attribute Information
• Other Picture
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FSIs, continued FSIs, continued
• Findings from LeClerc and Little (1997)– “Ad execution” does impact response to FSIs
– When product category involvement is low:• Customers are less likely to be motivated to
process; they respond to the “peripheral cue” of an attractive picture
– When product involvement is high:• Switchers motivated to process, since don’t
have a brand in mind; respond to more informational ads
• Loyals already have a brand in mind, have little incentive to process information; respond more to attractive pictures
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Trade CouponsTrade Coupons
• Advantages:+ Quick
+ Localized (can target a particular area)
+ Relatively inexpensive
• Disadvantages:– Localized
– Does not build brand equity
• Usage» Gain distribution
» Influence switchers
» Price discrimination
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Numerical FramingNumerical Framing
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Bonus or Price PacksBonus or Price Packs
• Advantages+Increases usage (takes consumer out
of the market)
• Disadvantages– Cost
– Production timing and cost (SKU)
• Usage» Good for preempting a new entrant
» Good for seasonal products
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Other Consumer PromotionsOther Consumer Promotions
• Frequency programs
• Contests– Skill
• Sweepstakes– Chance
• Refunds/Rebates
• Gifts/Premiums
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In conclusion…In conclusion…
• Promotion involves an extra incentive to purchase
• Consumer promotions can influence a variety of behaviors
• Promotions should be used to accomplish specific, concrete objectives
– Use promotions when you have an objective that is appropriate
– Utilize the best type of promotion for specific objective
• Firms often target customers loyal to competitors’ brands
– Switchers
• Evidence suggests that we may be under-targeting our own customers