Sales Promotion

Dr. George BelchSan Diego State University

Sales Promotion

Dr. George BelchSan Diego State University

An extra incentive to buy

An extra incentive to buy

A tool to speed up sales

A tool to speed up sales

An extra incentive to buy

An extra incentive to buy

A tool to speed up sales

A tool to speed up sales

Targeted to different parties

Targeted to different parties

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 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.”

SamplesSamples

CouponsCoupons

PremiumsPremiums

Contests/sweepstakesContests/sweepstakes

Refunds/rebatesRefunds/rebates

Bonus PacksBonus Packs

Price-off dealsPrice-off deals

Frequency programsFrequency programs

Cooperative advertisingCooperative advertising

Trade allowancesTrade allowances

Training programsTraining programs

Contests, dealer incentivesContests, dealer incentives

Point-of-purchase displaysPoint-of-purchase displays

Trade showsTrade shows

Sales Promotion Vehicles

Consumer-OrientedConsumer-Oriented Trade-OrientedTrade-Oriented

Event marketingEvent marketing

SamplesSamples

CouponsCoupons

PremiumsPremiums

Contests/sweepstakesContests/sweepstakes

Refunds/rebatesRefunds/rebates

Bonus packsBonus packs

Price-off dealsPrice-off deals

Loyalty programsLoyalty programs

Trade allowancesTrade allowances

Training programsTraining programs

Contests, dealer incentivesContests, dealer incentives

Point-of-purchase displaysPoint-of-purchase displays

Trade showsTrade shows

Event marketingEvent marketing

Growing power of retailersGrowing power of retailers

Declining brand loyaltyDeclining brand loyalty

Increased promotional sensitivityIncreased promotional sensitivity

Brand proliferationBrand proliferation

Fragmentation of consumer marketsFragmentation of consumer markets

Short-term focus of marketersShort-term focus of marketers

Increased accountabilityIncreased accountability

CompetitionCompetition

ClutterClutter

CompetitionCompetition

Increased accountabilityIncreased accountability

Short-term focus of marketersShort-term focus of marketers

Fragmentation of consumer marketsFragmentation of consumer markets

Brand proliferationBrand proliferation

Increased promotional sensitivityIncreased promotional sensitivity

Declining brand loyaltyDeclining brand loyalty

Growing power of retailersGrowing power of retailers

Reasons for Increase in Sales Promotion

ReasonsReasons

Communicate distinctive brand

attributes

Communicate distinctive brand

attributesBuild long-term

brand preferenceBuild long-term

brand preferenceDevelop and

reinforce brand identity

Develop and reinforce brand

identity

“Frequency” programs

encourage repeat purchase

“Frequency” programs

encourage repeat purchase

“Frequency” programs encourage

patronage loyalty

“Frequency” programs encourage

patronage loyalty

Contests and, sweepstakes that

increase involvement and help build equity

Contests and, sweepstakes that

increase involvement and help build equity

“Frequency” programs that

encourage repeat purchase and

loyalty

“Frequency” programs that

encourage repeat purchase and

loyalty

Build long-term brand preferenceBuild long-term

brand preferenceDevelop and

reinforce brand identity

Develop and reinforce brand

identity

Communicate distinctive brand

attributes

Communicate distinctive brand

attributes

Consumer Franchise-Building (CFB) Promotions

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CFB Promotional Objectives

CFB Promotional Objectives

CFB Techniques and Practices

CFB Techniques and Practices

Premium offers that reinforce the brand image and help build equity

Premium offers that reinforce the brand image and help build equity

Accelerate the purchase decision

process

Accelerate the purchase decision

process

Do not identify unique brand

features

Do not identify unique brand

features

Generate an immediate sales

increase

Generate an immediate sales

increase

Do not contribute to brand identity or

image

Do not contribute to brand identity or

image

Do not identify unique brand

features

Do not identify unique brand

features

Generate an immediate sales

increase

Generate an immediate sales

increase

Accelerate the purchase decision

process

Accelerate the purchase decision

process

Nonfranchise-Building (non-FB) Promotions

Non-FB Promotional Objectives

Non-FB Promotional Objectives

Non-FB Promotions . . .Non-FB Promotions . . .

Price-off dealsPrice-off deals Rebates or refunds

Rebates or refundsBonus packsBonus packs

Trade promotions benefits may not reach customers

Trade promotions benefits may not reach customers

If they do, they may lead only to price reductions

If they do, they may lead only to price reductions

If they do, they may lead only to price reductions

If they do, they may lead only to price reductions

Trade promotions benefits may not reach customers

Trade promotions benefits may not reach customers

Rebates or refunds

Rebates or refundsBonus packsBonus packsPrice-off dealsPrice-off deals

Nonfranchise-Building (non-FB) Promotions

Non-FB Promotions May Include . . .

Non-FB Promotions May Include . . .

Non-FB Promotions Shortcomings

Non-FB Promotions Shortcomings

Customers may “buy price” rather than brand equity

Customers may “buy price” rather than brand equity

To increase consumption of an established

brand

To increase consumption of an established

brand

To target a specific segment

To target a specific segment

Enhance IMC efforts and build

brand equity

Enhance IMC efforts and build

brand equity

To defend (maintain)

current customers

To defend (maintain)

current customers

To obtain trial and purchaseTo obtain trial and purchase

To target a specific segment

To target a specific segment

To defend (maintain)

current customers

To defend (maintain)

current customers

To increase consumption of an established

brand

To increase consumption of an established

brand

To obtain trial and purchaseTo obtain trial and purchase

Objectives of Consumer-Oriented Sales Promotion

ObjectivesObjectives

The products are of relatively low unit value,

so samples don’t cost much

The products are of relatively low unit value,

so samples don’t cost much

The products are divisible and can be broken into small sizes that can reflect the

products features and benefits

The products are divisible and can be broken into small sizes that can reflect the

products features and benefits

The purchase cycle is

relatively short so the

consumer can purchase in a

relatively short time period

The purchase cycle is

relatively short so the

consumer can purchase in a

relatively short time period

The products are of relatively low unit value,

so samples don’t cost much

The products are of relatively low unit value,

so samples don’t cost much

The products are divisible and can be broken into small sizes that can reflect the

products features and benefits

The products are divisible and can be broken into small sizes that can reflect the

products features and benefits

Sampling

Sampling Works Best When

Sampling Works Best When

Event samplingEvent sampling

Door-to-doorDoor-to-door

Direct mailDirect mail

Central location distributionCentral location distribution

In-store samplingIn-store sampling

Cross-product samplingCross-product sampling

Co-op package distributionCo-op package distribution

With newspaper/magazineWith newspaper/magazine

Internet sitesInternet sites

Event samplingEvent sampling

With newspaper/magazineWith newspaper/magazine

Co-op package distributionCo-op package distribution

Cross-product samplingCross-product sampling

In-store samplingIn-store sampling

Central location distributionCentral location distribution

Direct mailDirect mail

Door-to-doorDoor-to-door

Sampling Methods

MethodsMethods

Coupons

© 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin

CouponsCoupons

80 percent of consumers

use coupons and 25% use them regularly

Nearly 240 billion

distributed each year in the US

The oldest and

most widely used sales promotion tool

Nearly 260 billion

distributed each year in the US

The oldest and

most widely used sales promotion tool

FSIs are the Most Popular Types of Coupons

Free Premiums: Only require purchase of the product

Free Premiums: Only require purchase of the product

Self-liquidating Premiums: require consumer to pay some or all of the cost of the premium

Self-liquidating Premiums: require consumer to pay some or all of the cost of the premium

Free Premiums: Only require purchase of the product

Free Premiums: Only require purchase of the product

Premium: an offer of an item of merchandise or service either free or at a low cost that is an extra incentive for customers

Premium: an offer of an item of merchandise or service either free or at a low cost that is an extra incentive for customers

Premiums

Two Types of PremiumsTwo Types of Premiums

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 closes to some predetermined criteria

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 closes 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.

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.

Bonus PacksBonus Packs

Frequency/Loyalty

Programs

Frequency/Loyalty

Programs

Event Marketing

Event Marketing

Price-off DealsPrice-off DealsRefunds and Rebates

Refunds and Rebates

Frequency/Loyalty

Programs

Frequency/Loyalty

Programs

Price-off DealsPrice-off Deals

Bonus PacksBonus Packs

Refunds and Rebates

Refunds and Rebates

Other Popular Consumer Sales Promotion Tools

OtherPromotional

Tools

OtherPromotional

Tools

Encourage retailers to display

existing brands

Encourage retailers to display

existing brands

Encourage retailers to display

existing brands

Encourage retailers to display

existing brands

Obtain distribution of new products

Obtain distribution of new products

Maintain trade support for existing

products

Maintain trade support for existing

products

Build retail inventoriesBuild retail inventories

Maintain trade support for existing

products

Maintain trade support for existing

productsObtain distribution of

new productsObtain distribution of

new products

Trade-Oriented Sales Promotion Objectives

ObjectivesObjectives

Trade ShowsTrade ShowsTrade ShowsTrade Shows

Contests and Incentives

Contests and Incentives

Contests and Incentives

Contests and Incentives

Trade AllowancesTrade Allowances

Point-of-Purchase Displays

Point-of-Purchase Displays

Sales Training Programs

Sales Training Programs

Cooperative Advertising

Cooperative Advertising

Types of Trade-Oriented Promotions

Buying Allowances

Buying Allowances

Promotional Allowances

Promotional Allowances

Slotting Allowances

Slotting Allowances

Buying Allowances

Buying Allowances

Promotional Allowances

Promotional Allowances

Trade AllowancesTrade Allowances

Point-of-Purchase Displays

Point-of-Purchase Displays

Sales Training Programs

Sales Training Programs Slotting

AllowancesSlotting

Allowances

Types of Cooperative Advertising

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Cooperative

Advertising

Cooperative

Advertising

VerticalCooperativeAdvertising

Ingredient-Sponsored

Coop Advertising

Horizontal Cooperative Advertising

Ingredient-Sponsored

Coop Advertising

Horizontal Cooperative Advertising

Directly accountableDirectly accountable

Continuing serviceContinuing service

Agency team contactAgency team contact

Creates strategyCreates strategy

One full-service firmOne full-service firm

Equal to ad agencyEqual to ad agency

Created tacticsCreated tactics

Do single projectDo single project

Hired for specialtyHired for specialty

Single agency contactSingle agency contact

Inferior to ad agencyInferior to ad agency

Indirect accountabilityIndirect accountability

Created tacticsCreated tactics

Do single projectDo single project

Hired for specialtyHired for specialty

Single agency contactSingle agency contact

Inferior to ad agencyInferior to ad agency

Indirect accountabilityIndirect accountability

Continuing serviceContinuing service

Agency team contactAgency team contact

Creates strategyCreates strategy

One full-service firmOne full-service firm

Equal to ad agencyEqual to ad agency

Promotion Agencies’ Shifting Role

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TraditionalTraditional New and ImprovedNew and Improved

The Sales Promotion Trap

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