What is Sales Promotion? - DEUkisi.deu.edu.tr/sumeyra.kurt/MRK 4246/PPT/SALES PROMOTION.pdf1/2/2017...
Transcript of What is Sales Promotion? - DEUkisi.deu.edu.tr/sumeyra.kurt/MRK 4246/PPT/SALES PROMOTION.pdf1/2/2017...
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What is Sales Promotion?
Sales promotion consists of a collectionof incentive tools, mostly short term,designed to stimulate quicker or greaterpurchase of particular products orservices by consumers or the trade.
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The Nature of Sales Promotion
o Sales Promotion
Is any incentive that is additional to the basic benefits provided by the brand and temporarilychanges its perceived price or value
Is short-term oriented and capable of influencing behavior because it offers buyers superior value and can make them feel better about the buying experience
The Nature of Sales Promotion
o Purposes of Sales Promotion
To induce the trade (wholesalers and retailers) or consumers to buy a brand
To encourage the manufacturer’s sales force to sell a brand aggressively
To encourage immediate, desired shopping and purchasing behaviors from their consumers
To encourage people to increase their donations to nonprofits now rather than later
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Developments Underlying the Growth in Promotions
• Shift in manufacturer versus retailer balance of power
• Increased brand parity and price sensitivity
• Reduced brand loyalty
• Reduced media effectiveness
• Emphasis on short-term results in corporate reward structures
• Increase in responsiveness of consumers to promotion
Using Sales Promotions
o Establish objectives
o Select tools
o Develop program
o Pretest
o Implement and control
o Evaluate results
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Consumer-Directed Sales Promotion Tactics
• Samples
• Coupons
• Cash refund offers
• Price offs
• Premiums
• Prizes
• Patronage rewards
• Free trials
• Tie-in promotions
Brand-Level Promotion Targets
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Major Consumer-Oriented Promotions
Sampling
o Sampling
Any method used to deliver an actual- or trial-sized product to consumers
o Why Sampling Is Effective
It gives consumers an opportunity to experience a new brand personally
It allows an active, hands-on interaction rather than a passive encounter, as is the case with the receipt of promotional techniques such as coupons
It is almost a necessity when introducing truly new products that can afford this form of promotion
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Sampling Methods and Media
Direct Mail • Mailed directly to households targeted by
demographic characteristics or
geodemographics
Newspapers
and Magazines
• Samples included in magazines and
newspapers represent cost-efficient forms of
sampling for reaching a mass audience
Door-to-Door
Distribution
• Allows considerable targeting and has
advantages of lower cost and short lead times
between a sampling request and when the
samples are delivered to targeted households
On- or In-pack
Sampling
• Uses the package of another product to serve
as the sample carrier
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Sampling Methods and MediaHigh-Traffic
Locations
• Shopping centers, movie theaters, airports, and
special events offer valuable forums for sample
distribution
In-Store
Sampling
• Providing samples in grocery stores and other
retail outlets for trial while consumers are
shopping
Internet
Sampling
• Distributing samples online through the services
of companies that specialize in online sample
delivery
Couponing
o Coupon
A promotional device that rewards consumers for purchasing the coupon-offering brand by providing cents-off savings
• Instant coupons
• Mail- or media-delivered coupons
o Couponing Background
Nearly 280 billion coupons are distributed annually in the United States.
Cost to U.S. marketers is about $7 billion a year
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Coupon Distribution Methods
o Freestanding Inserts (FSIs)
o Handouts in stores
o Direct Mail
o Magazines
o Newspapers
o In- and On-Package
o Internet
Illustration of Cents-Off Coupon Offers
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Premiums
Free-with-
Purchase
Premiums
• Delayed reward to consumers primarily
designed to generate trial purchases
• Perceived value of a premium item, or gift,
depends on the value of brand offering gift
Mail-In Offers • Delayed reward to consumers primarily
designed to generate trial purchases.
• Few consumers exposed to free mail-in offers
take advantage of the opportunities
In-, On-, and
Near-Pack
Premiums
• Offer a free item of immediate value inside or
attached
• Provide the retail trade with premium item that
retailers then give to consumers
• Are less expensive due to no additional
packaging
Illustration of a Mail-in Premium
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Premiums“Buy X, Get 1
Free” Offers
• Represents an immediate reward to
consumers, and, for manufacturers
• Rewards a brand’s loyal customers or
encourages trial from purchasers of
competitive brands who are willing
to switch in order to save money
Self Liquidating • Consumer mails in proof-of-purchase with
sufficient money to receive the premium item
• Premium should be appealing and represent
a value
Phone Cards • Repeat-purchasing objective
• Delayed reward
• Preset amount of calling time
Bonus Packs
o Bonus Packs
Are extra quantities of a product that are offered for the same price
Offer an alternative to price-off deals
Will be purchased by regular customers who would have purchased the brand anyway
Load current users; thereby removing them from the market
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Games
o Promotional Games
Provide an instant reward
Create excitement, stimulate brand interest, and reinforce brand loyalty
Rebates and Refunds
o Rebate (also Refund)
Refers to the practice in which manufacturers give cash discounts or reimbursements to consumers who submit proofs of purchase
Offers consumers delayed rather than immediate value, since the consumer must wait to receive the reimbursement
Can attract switchers from competitive brands who avail themselves of attractive discount offers
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Illustration of a Rebate Offer
Sweepstakes
o Sweepstakes (Sweeps)A promotion in which winners are determined purely
on the basis of chance
o Sweepstakes as a Promotional ToolAre relatively inexpensive and simple to execute
Reinforce brand positioning and image
Attract attention to advertisements
Promote increase brand distribution at retail
Foster sales force enthusiasm
Can reach special groups
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Illustration of a Sweepstakes Offer
Illustration of another Sweepstakes Offer
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Contests
o ContestsA promotion in which participants must act according
to the rules of the contest and may or may not be required to submit proofs-of-purchase
o Online Sweeps and ContestsAre growing in importance
Direct consumers to register online to participate in sweeps or contests
Create brand awareness, build consumer interaction with a brand, and enable expansion of a brand’s opt-in e-mail database
Illustration of a Promotional Contest
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Continuity Promotions
o Continuity Promotions
Reward consumers’ repeat purchasing behaviors
• Loyalty programs
• Point programs
Serve to cement a long-term relationship with the consumer
Turkish Airlines-Miles & Smiles
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Overlay and Tie-In Promotions
o Overlay (Combination) Program
Is the simultaneous use of multiple promotion tools to promote a brand or to promote brands cooperatively from different firms
• Printed coupon with an mail-in entry contest form
Increases the likelihood that consumers will attend a promotional message that cuts through clutter
Overlay and Tie-In Promotions (cont’d)
o Tie-in (Group) Promotion
Is the simultaneous promotion of multiple brands in a single intracompany or intercompany (joint) promotional effort
• Branded pizza and branded soft drink combination offers
Is cost-effective, but lead time is lengthened
Should reinforce partners’ images of each other
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Illustration of an Intercompany Tie-In
Illustration of an Intercompany Tie-In
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Illustration of an Intracompany Tie-In
Tasks That Promotions Can and Cannot Accomplish
oSales Promotions Can
• Stimulate sales force enthusiasm for a new, improved, or mature product
• Invigorate sales of a mature brand
• Facilitate the introduction of new products to the trade
• Increase on- and off-shelf merchandising space
• Neutralize competitive advertising and sales promotions
• Obtain trial purchases from consumers
• Hold current users by encouraging repeat purchases
• Increase product usage by loading consumers
• Preempt competition by loading consumers
• Reinforce advertising
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Tasks That Promotions Can and Cannot Accomplish
oSales Promotions Cannot
•Compensate for a poorly trained sales force or for a lack of advertising
•Give the trade or consumers any compelling long-term reason to continue purchasing a brand
•Permanently stop an established brand’s declining sales trend or change the basic nonacceptance of an undesired product
The Role of Trade Promotions
o Trade Promotions’ Scope and Objectives
1. Introducing new or revised products
2. Increasing distribution of new packages or sizes
3. Building retail inventories
4. Maintaining or increasing manufacturer’s share of shelf space
5. Obtaining displays outside normal shelf locations
6. Reducing excess inventories and increasing turnover
7. Achieving product features in retailers’ advertisements
8. Countering competitive activity
9. Selling as much as possible to final consumers
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Trade-Directed Sales Promotion Tactics
• Price offs
• Allowances
• Free goods
• Sales contests
• Spiffs
• Trade shows
• Specialty advertising
Trade Allowances
o Trade Allowances
Are used because manufacturers hope to increase purchases of the manufacturer’s brand by wholesalers and/or retailers
Augment consumers’ purchases of the manufacturers’ brand from retailers
Foster the expectation that retailers will pass along their savings to consumers
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Major Forms of Trade AllowancesOff-Invoice
Allowances
• Most frequently used form
• Deals offered to trade that permit wholesalers and
retailers to deduct a fixed amount from the invoice
• Retailers may not pass along discounts to consumers
Bill-Back
Allowances
• Retailers receive allowances for featuring the
manufacturer’s brand in advertisements or for providing
special displays
Slotting
Allowances
• Fees that manufacturers pay retailers for access to the
slot, or location
• Fees paid by a manufacturer to get its new brand
accepted by retailers—a form of bribery? or legitimate
cost of doing business?
Exit Fees
(Deslotting
Allowances)
• If brand does not meet an average weekly sales volume,
the retailer can assess a deslotting charge for removing
the item from its distribution center,
Trade Promotion Activities
Everyday Low Pricing
(EDLP) or Value Pricing
• When a retailer charges the same price for
a particular brand day in and day out
EDLP(M) • A form of pricing whereby a manufacturer
charges retailers the same price for a
particular brand day in and day out.
Pay-for-Performance
Programs
• Reward retailers for selling the brands
supported with trade allowances rather
than merely buying these brands.
• Produce win-win-win situations
• Provide incentives to the retailer only for
the items that are sold to consumers
during the agreed-upon time period
• Benefit all parties: consumers, retailers,
and manufacturers
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1. Temporary retail price reductions substantially increase sales.
2. The greater the frequency of deals, the lower the height of the deal spike.
3. The frequency of deals changes the consumer’s reference price.
4. Retailers pass through less than 100 percent of trade deals.
5. Higher-market-share brands are less deal elastic.
6. Advertised promotions can result in increased store traffic.
7. Feature advertising and displays operate synergistically to influence sales of discounted brands.
8. Promotions in one product category affect sales of brands in complementary and competitive categories.
9. The effects of promoting higher- and lower-quality brands are asymmetric.
Nine Empirical Generalizations about Promotions