Sales Promotion. An Extra Incentive to Buy A Tool to Speed up Sales An Extra Incentive to Buy A Tool...

Sales Promotion

Sales Promotion

An Extra Incentive to Buy


A Tool to Speed up Sales






Targeted to Different Parties

Targeted to Different Parties

“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.”

Types of Sales Promotion Activities

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

Event MarketingEvent Marketing

SamplesSamples

CouponsCoupons

PremiumsPremiums

Contests/sweepstakesContests/sweepstakes

Refunds/rebatesRefunds/rebates



Frequency ProgramsFrequency Programs


Training ProgramsTraining Programs

Contests, Dealer IncentivesContests, Dealer Incentives

Point-of-purchase DisplaysPoint-of-purchase Displays


Event MarketingEvent Marketing

Consumer-OrientedConsumer-Oriented Trade-OrientedTrade-Oriented

Growth of Sales Promotion

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

'89 ‘90 ‘91 ‘92 '93 '94 '95 '96 '97 '98 '99 ‘00

Consumer Promotions

Media Advertising

Trade Promotions

Percent of Total Promotional Dollars, 3-year Moving Average.Percent of Total Promotional Dollars, 3-year Moving Average.

Reasons for the Growth of Sales Promotion

Short-Term FocusShort-Term Focus

Fragmentation of the Consumer MarketFragmentation of the Consumer Market

Brand ProliferationBrand Proliferation

Increased Promotional SensitivityIncreased Promotional Sensitivity

Declining Brand LoyaltyDeclining Brand Loyalty

Growing Power of RetailersGrowing Power of Retailers

Strategic Importance of Sales PromotionStrategic Importance of Sales Promotion

Reaching a Specific Target AudienceReaching a Specific Target Audience

ReasonsReasons

Increased AccountabilityIncreased Accountability

CompetitionCompetition

ClutterClutter

Objectives of Consumer Sales Promotion

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 Purchase

To Obtain Trial and Purchase ObjectivesObjectives

To Enhance IMC Efforts and Build

Brand Equity

To Enhance IMC Efforts and Build

Brand Equity

Consumer Sales Promotion Strategy Decisions

Three categories of strategic decisions for sales promotion:

1. Strategic tools/options

2. Application across product lines

3. Application in geographic markets

1. Strategic Tools/Options

Communicate Distinctive Brand

Attributes


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

Patronage Loyalty


Patronage Loyalty


Patronage Loyalty


Patronage Loyalty





Build Long-term Brand PreferenceBuild Long-term

Brand PreferenceDevelop and

Reinforce Brand Identity

Develop and Reinforce Brand

Identity


Attributes


Attributes

Franchise Building Promotional ObjectivesFranchise Building

Promotional Objectives

Franchise Building Techniques and Practices

Franchise Building Techniques and Practices

May Improve One-on-one

Communications

May Improve One-on-one

Communications

WD-40 Brand Building Sweepstakes

1. Strategic Tools/Options

Figure 13-2

2. Application Across Product Lines

Across the entire line or on individual items?

If individual items, which ones?More or less popular?Higher or lower price points?Regular stock or special version?

3. Application Across Geographic Markets

Sales promotion Nationally or in select markets.

Consumer Sales Promotion Tactical Decisions

DistributionDistribution

TimingTiming

Value of IncentiveValue of Incentive

ExecutionExecution

Sampling

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 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











Sampling Works Best When

Sampling Works Best When

Strengths and Limitations of Sampling

StrengthsStrengths LimitationsLimitations

Induce prospective buyer to try product or service


Greater consumer appreciation of product

benefits


benefits

Learning period required to appreciate brand

requires large sample size

Learning period required to appreciate brand

requires large sample size

Brand must have unique benefit to induce repeat

purchases


purchases




benefits


benefits


purchases


purchases

Sampling Methods

Location SamplingLocation Sampling

Door-to-door SamplingDoor-to-door Sampling

Sampling through MediaSampling through Media

Sampling through MailSampling through Mail

In-store SamplingIn-store Sampling

On-product SamplingOn-product Sampling

Event SamplingEvent Sampling

Direct SamplingDirect Sampling

The InternetThe Internet

Location SamplingLocation Sampling

Direct SamplingDirect Sampling

Event SamplingEvent Sampling

On-product SamplingOn-product Sampling

In-store SamplingIn-store Sampling

Sampling through MailSampling through Mail

Sampling through MediaSampling through Media

Door-to-door SamplingDoor-to-door Sampling

MethodsMethods

Armor All Uses an On-Package Sample

Coupons

CouponsCoupons

85% of Canadians used coupons last year

Canadians use about 8

coupons per person

1/3 of all Canadians

used coupons in the past week

in 2003

Over half of all Canadian

households claim coupons influence their

brand purchase decisions

Strengths and Limitations of Coupons

Appeal to Price Sensitive Consumer


Can Offer Price Break Without Retailers CoopCan Offer Price Break

Without Retailers Coop

Can Be Effective Way to Induce Trial of New or

Existing Products


Existing Products

Can Be Way to Defend Market Share and

Encourage Repurchase



Coupons Are Often Used by Loyal Consumers Who

May Purchase Anyway


May Purchase Anyway

Improper Redemption and Fraud

Improper Redemption and Fraud

Difficult to Determine How Many Consumers Will Use

Coupons and When


Coupons and When

Declining Redemption Rates and High Costs of

Couponing


Couponing



Can Offer Price Break Without Retailers CoopCan Offer Price Break

Without Retailers Coop


Existing Products


Existing Products






May Purchase Anyway


May Purchase Anyway


Coupons and When


Coupons and When


Couponing


Couponing


Coupon Distribution Across All Media (2003)

Data from Figure 13-7

FSI

I n-store

I n/on package

Magazine

Direct mail

Other

Charity

FSI

I n-store

I n/on package

Magazine

Direct mail

Other

Charity

Valpak’s Advertising Helps Enhance the Value of Coupons

Coupons Are Now Available Online

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

Self-liquidating Premiums: Require Consumer to Pay Some or All of the Cost of the Premium



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

Two Types of PremiumsTwo Types of Premiums

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.

Contests and Sweepstakes

Refunds and Rebates

Refunds: Offers by the manufacturer to return a portion of the product purchase price, usually after the consumer supplies some proof of purchase.

Refunds: Offers by the manufacturer to return a portion of the product purchase price, usually after the consumer supplies some proof of purchase.

Strengths and Limitations of Refunds and Rebates

Create New UsersCreate New Users

Brand Switching or Repeat Purchases


Temporary Price ReductionTemporary Price Reduction

Effort to Obtain RefundEffort to Obtain Refund

Delay in Obtaining RefundDelay in Obtaining Refund

Image of Refunds/RebatesImage of Refunds/Rebates

Create New UsersCreate New Users



Temporary Price ReductionTemporary Price Reduction

Effort to Obtain RefundEffort to Obtain Refund

Delay in Obtaining RefundDelay in Obtaining Refund


SlippageSlippageSlippageSlippage

Other Sales Promotion Tools

Frequency/Loyalty

Programs

Frequency/Loyalty

Programs



OtherPromotional

Tools

OtherPromotional

ToolsEvent

MarketingEvent

Marketing

Gerber Developed a Sweepstakes in Conjunction with a Loyalty Program

Bonus Packs

Extra amount of product at regular price by providing larger containers or extra units.

Objectives of Trade Sales Promotion

Encourage Retailers to Display

Existing Brands


Existing Brands


Existing Brands


Existing Brands

Obtain Distribution of New Products

Obtain Distribution of New Products

Maintain Trade Support for Existing

Products


Products

Build Retail InventoriesBuild Retail Inventories


Products


ProductsObtain Distribution

of New ProductsObtain Distribution

of New Products

ObjectivesObjectives

Trade Sales Promotion Strategy Options


Contests and IncentivesContests and Incentives


Point-of-Purchase Displays

Point-of-Purchase Displays

Sales Training ProgramsSales Training Programs

Cooperative AdvertisingCooperative Advertising

Buying Allowances

Buying Allowances

Promotional Allowances

Promotional Allowances

Slotting Allowances

Slotting Allowances

EventsEvents

Chicken of the Sea Targets the Trade with this Collateral Piece

The Sales Promotion Trap

Figure 13-10

Sales Promotion. An Extra Incentive to Buy A Tool to Speed up Sales An Extra Incentive to Buy A Tool...

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