Sales Promotion - Week #4Retail Sales Promotion

• Review: To Whom am I Selling?

• Retail Sales Promotion

• Quiz on Chapter 3

• Present Target Profiles and Features & Benefits to Class

• Meet one-on-one, continue working on projects

Understanding Consumers: Demographics

• “Hard” data such as:– Age– Gender– Race– Level of Education– Income– Marital status

Understanding Consumers: Psychographics

• Emotional, stylistic, opinions– Activities (hobbies, sports, etc.)– Price consciousness– Lifestyles– Patterns of usage (how much/how often do you

buy?)

Consumer Groups

• “Catch-all” groups that represent average sets of demographics and psychographics

• Example: Young Contemporary– Fashion emulation, not leadership– Clothes as self-expression– Quality not important– Shop ‘til they drop

• Demographics and psychographics of the Young Contemporary group?

Target Profiles – Positioning Statement+

• Detailed profiles of your typical consumers.• (Sample) Natural Products Consumer:

– Age: 35

– Sex: Female

– Household Income: $80K

– Married: Yes

– Typical stores: Whole Foods, Trader Joe’s

– Status: Rising

– Price conscious: Somewhat

– Magazines: Martha Stewart

– Consumer Group: Classic

Retail Sales Promotion• Why Promote?

– Awareness– Interest– Desire– Action

• External Factors– Seasons– Holidays– Events– Sales Cycle– Competition

• Other Factors– Historical Factors

– Sales Goals

– Flavor of the Week

Benefits of Promotion

• Control and anticipate– Sales– Expenses

• Control inventory

• Project image

Considerations: Desired Image

• Name

• Logo

• Style

• Features and Benefits– Product– Store

• Price Points

Considerations: Reach and Cost

• Reach– Who will see it

• Cost– What it will cost– CPM: Cost per thousand

• Examples– Superbowl: $2.4-2.5 Million for 2006 30-sec.

Other considerations

• Coordination– The story of this course– All elements must support each other!

• Creativity– Deliver the message in an engaging way– Must stand out

• We see thousands of messages every day

Budgeting

• Sales Promotion Appropriation– The amount of money spent on sales promotion– Typically 1.5% - 6% of net sales

• Top-to-Bottom Method– Overall budget is created and allocated to various

divisions

• Bottom-to-Top Method– Promotional funding is determined by each division

• All-you-can-afford– Based on other limitations/needs

• Today’s Reality: A combination

Other Promotional Costs

• Payroll

• Supplies

• Postage & Printing

• Travel

• Miscellaneous

Planning the Calendar

Promotion Schedule

Planning the Calendar: Needs

• A list of national holidays & local events

• Last year’s calendar

• Historical sales and promotion expenses

Planning the Calendar: Create the Budget

• Monthly sales goals– Use last year’s sales as guide

• Needed promotion– As percentage of Sales Goals

– Other factors

• Reserve budget– 10-20%

• Allocation– Divided among various activities

– Don’t forget other expenses

Planning the Calendar: The Calendar!

• Use the allocation to determine:– Media buys– Displays– Events– Etc.

• Create daily plan

Case Study: Country Junction

Furniture Gifts

Home Decor Building Materials Lawn & Garden

Seasonal

Hardware & Tools Pets & Pet Supplies

Flooring Rental Equipment

Kitchen & Bath Paint Center

Country Junction 2002 Calendar of EventsJanuary 5-20: Storewide Sidewalk SaleMarch 23&24 Pictures with the Easter

BunnyMarch 23: Free Easter Egg HuntMarch 29 & 30: Free Easter Egg Hunts,

Pictures with the Easter BunnyMay 4: Flea Market –Open Sat & Sun

through Sept. 14May 22: Lobster Feast (private party by

invitation only for top 500 customers)May 27: Happy Memorial Day! OPEN 9-

5July 4: Happy Independence Day! OPEN

9-5September 2: Happy Labor Day! OPEN

9-5September 15: Annual Yard saleSeptember 22: Car Show

Sept 28-Oct 31: The Great Pocono Pumpkin Festival

September 28: Fright Night

October 4&5: Fright Night

October 11&12: Fright Night

October 18&19: Fright Night

October 25&26: Fright Night

November 9: Annual Public Auction

November 23: Santa Claus Arrives! Pictures with Santa 11-4

Nov. 23&24: Pictures with Santa 11-4

Nov 29&30: Pictures with Santa 11-4

Dec 1,7,8,15,16 Pictures with Santa 11-4

Dec 22 & 23 Pictures with Santa 11-4

December 24: Christmas Eve Close at 3pm

Drawbacks of Promotion

• Variability is painful!– Inconsistent ordering/production– Train customers to wait for sales– Extra expenses (e.g. overtime) can be high– Customers may go to competition

• Retail Promotion is a Slippery Slope!

Solution: EDLP

• Every Day Low Price– Walmart– Trader Joe’s– Warehouse Clubs

• Reduce Variability

• Train customers– Shop anytime– Build trust

Price Protection

• Same item advertised at lower price– Within 30 days– Bring in ad– Receive difference

• Often with a 10% bonus

• Retailers can “cheat”!– Similar models with different numbers

Automatic Price Protection

• They look for other ads

• Automatically send you a check!

APP Followup

• Tweeter was committed to APP

• In 2002, reconsidered– They had reimbursed $780,000– 5% of consumers used regular PP (RPP)– Under RPP, would have reimbursed $48,000!– Plus, many people didn’t understand APP

• Or care?!

• Ended APP program

• Used same money for other promotion

Break

Video: Buy-ology

Product Presentations

• Product Name/Description

• Market Positioning

• Target Profiles

• Features vs. Benefits

HOMEWORK:

• Read Chapter 4 (Advertising Department)

• Refine:– Product concept/description.– Product Name– Positioning statement– 3-5 Target Profiles– Features vs. Benefits– Logo References– Finish Logo

Preview of Next Week

• Project Review– Show me what you’ve done– Must be up to date

• See previous slide

• Packaging