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Chapter 15

Sales Promotions

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Sales Promotion

“Sales Promotion is a Marketing Discipline that Utilizes a Variety of Incentive Techniques to Structure

Sales-Related Programs Targeted to Consumers, Trade, and/or Sales Levels that Generate a Specific,

Measurable Action or Response for a Product or Service.”

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Sales Managers are Under Great Pressure to Produce Results

Quickly.

Sales Promotion Strategies Target

Consumer, Trade, andThe Sales Force.

Assessment of Sales Promotion is

Relatively Easy.

Cost for ResultsIn This Industry Are

Relatively Low.

Reasons for the Growth of Sales Promotion

Why Are Companies Spending More and More

Money on SalesPromotion?

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Promotion Strategies

Promotion Can: Offer an

immediate inducement,

Cause customers to try a product,

Persuade customers to buy again,

Introduce a new product or build a brand over time.

Promotion Can’t: Create an image

for a brand, Compensate for a

lack of advertising,

Do much to compensate for a negative image,

Reverse a sales decline.

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ObjectivesObjectives

Intended to Change Consumer

Behavior

Building BrandsBuilding Brands

Can be Used to BuildBrand Images, ButMay be Long-Term

Introducing Introducing New ProductsNew Products

Advertising and PromotionWork Well Together

Here UsingPush & PullStrategies

Sales Promotion Strategies

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Consumer-Oriented Promotions

Consumer-Oriented

Promotion

Samples

Coupons

Premiums

Contests/sweepstakes

Refunds/rebates

Bonus packs

Price-offs

Event sponsorship

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Obtaining trial and repurchase

Increasing consumption of an established brand

Defending current customers

Targeting a specific market

Enhancing advertising and marketing efforts

Objectives of Consumer-Oriented Sales Promotion

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Advantages of Coupons

Offers price reduction only to consumers who are price sensitive

Does not rely on retailers’ cooperation

Generates trial of a new brand

Encourages non-users to try an established brand or users to repeat use

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Disadvantages of Coupons

Difficult to estimate redemption rates (<2%)

May be redeemed by loyal users who would buy anyway

Expensive

Misredemption and fraud

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ContestsContests

Compete for a Prize BasedOn Some Skill or Ability

Compete for a Prize BasedOn Some Skill or Ability

Generates High DegreeOf ConsumerInvolvement

Generates High DegreeOf ConsumerInvolvement

Can Help Revive

LaggingSales

Can Help Revive

LaggingSales

Contests and Sweepstakes

SweepstakesSweepstakes

Participants Submit NamesTo Be Included in Drawing

Participants Submit NamesTo Be Included in Drawing

Game – Type of Sweepstakes;

Time Frame MuchLonger

Game – Type of Sweepstakes;

Time Frame MuchLonger

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Effective way of getting the consumer to become involved with the brand by making the promotion product relevantGenerate interest in or excitement over a brand and attracting attention to advertisingEffective way of dealing with specific marketing problems

Advantages of Sweepstakes and Contests

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Disadvantages of Contests and Sweepstakes

May overshadow the ad or brand

May detract from brand franchise or image

Legal problems and administration

Presence of professionals or hobbyists who may submit entries and detract from effectiveness

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Station BreakGo to the McDonald’s Web site at www.mcdonalds.com.

This site provides a variety of activities for visitors including contests and sweepstakes.

What is your view of contests or sweepstakes where children might be involved (notice that the Web site is oriented toward younger customers)?

What is the purpose of the contest or sweepstakes in this case?

Do they help sell the products? Discuss in class.

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Refunds, Rebates, and Premiums

Refunds and RebatesA Marketer’s Offer to Return a Certain Amount Of

Money to the Consumer Who Purchases theProduct. i.e cash rebate + low-value coupon

PremiumsTangible Reward for Performing a Particular Act.

Direct – ReceivedAt Time of Purchase

Direct – ReceivedAt Time of Purchase

Mail – Proof of Purchase & Payment

Be Mailed In

Mail – Proof of Purchase & Payment

Be Mailed In

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Allowing the Customer to Experience the Product or Service.

Allowing the Customer to Experience the Product or Service.

Very Effective Strategy for Introducing A New or Modified Product.

Very Effective Strategy for Introducing A New or Modified Product.

Most Common Method of DistributingSamples is Through the Mail.

Most Common Method of DistributingSamples is Through the Mail.

9 Out of 10 Customers Prefer a SampleTo a Cents-Off Coupon to Introduce

Product.

9 Out of 10 Customers Prefer a SampleTo a Cents-Off Coupon to Introduce

Product.

Sampling

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Trade PromotionsTrade advertising is directed at wholesalers and retailers and represents 50% of the total promotional spending.

Four goals of a trade promotion are: Stimulate in-store merchandising or other trade support, Manipulate levels of inventory held by wholesalers and

retailers, Expand product distribution to new areas of the country

or new classes of trade, Create a high level of excitement about the product

among those responsible for its sale.

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Point-of-Purchase

Retailer Kits

Contests

Sweepstakes

Trade Shows

Types of Trade Promotions

Exhibits

Trade Incentives

Trade Deals

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Promotion Integration (Tab. 15.5)

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Objectives of Trade-Oriented Sales Promotions

Obtain distribution for new products

Maintain trade support for established brands

Encourage retailers to display established brands

Build retail inventories

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Some of the Most Popular POP Tools & TechniquesSome of the Most Popular POP Tools & Techniques

Mechanical ProductDispensers

Mechanical ProductDispensers

Price Cards

Signs

Banners

Special Racks

Carton Displays

Point-of-Purchase DisplaysDisplay Distributed to Retailers Used to Call

Customer’s Attention to Product Promotions.Display Distributed to Retailers Used to Call

Customer’s Attention to Product Promotions.

$12 Billion Business; Second Largest Category of Sales Promo Expenditures.

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Trade Shows & Exhibits

Allow Product Demonstrations,

Provide Information, & Answer

Questions.

$16.5 Billion is Spent Annually.

Trade Promotions

Retailer (Dealer) Kits

Materials That Help Reps Make Sales Calls Are Often Designed

as Kits.Contain Detailed Product Specs,

How-to-Do it Display, etc.

Contests & Sweepstakes

Advertisers Can Develop

Contests & Sweepstakes to

Motivate Resellers.

Occasional Use Only is Effective.

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Trade Incentives and Deals

Incentive Programsi.e. Used When Introducing

A New Product.Types Include Bonuses &

Dealer Loadings

Incentive Programsi.e. Used When Introducing

A New Product.Types Include Bonuses &

Dealer Loadings

$8 to $12 Billion Business Annually Designedfor Special Trade Promotional Circumstances. $8 to $12 Billion Business Annually Designed

for Special Trade Promotional Circumstances.

Trade DealsMost Important Reseller Sales Promo Technique.Types Include Buying & Advertising Allowances

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Sponsorships and Event Marketing

Sponsorships include a number of activities including: sports sponsorships, entertainment tours and attractions, festivals, fairs, and annual events, cause marketing – associating with an event that

supports a social cause, andarts.

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Sponsorships and Event Marketing

Event marketing describes the marketing practice in which a brand is linked to an event to create experiences for customers and associate the brand personality with a certain lifestyle.A sponsorship occurs when a company sponsors a sports event or concert, or supports a charity with its resources.It is attempting to increase the perceived value of the sponsor’s brand in the consumer's mind.Blimps, balloons, and inflatables are used at many events.

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Build Brands; Creating Both Awareness and

Reminders

Build Brands; Creating Both Awareness and

Reminders

Includes Everything From Hats With Logos

to T-shirts, & Mousepads

Includes Everything From Hats With Logos

to T-shirts, & Mousepads

Normally Have a Promotional Message Printed Somewhere

Normally Have a Promotional Message Printed Somewhere

Third Largest Category ofPromotional

Spending

Third Largest Category ofPromotional

Spending

Specialty Advertising