salespromotions-091022104511-phpapp02

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Sales Promotions

Sales promotion spurs action and

must complement advertising


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Sales Promotion

An extra incentive to buy

An acceleration tool

Targeted to different parties

An inducement to intermediaries

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.


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Reasons for Increase in Sales

Promotion

Growing Power of Retailers

Declining Brand Loyalty

Increased Promotional Sensitivity

Brand Proliferation

Fragmentation of Consumer Markets

Short-Term Focus

Increased AccountabilityCompetition

Clutter


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Sales Promotion Uses

Introduce new products by encouraging trial andrepurchase

Get existing customers to buy more

Attract new customers

Defend current customers

Maintain sales in off season

Target a specific market segment

Enhance IMC efforts and build brand equity (brand can

cheapen if SP is not designed to reinforce the brandpositioning)

If advertising spends are reduced to increase Sales Promotionsit can erode brand franchise and image (commodity /parity product image)


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Frequency programs

Sales Promotion Vehicles

Consumer-Oriented

Samples

Coupons

Premiums

Contests/sweepstakes

Refunds/rebates

Bonus packs

Price-off deals

Event marketing

Trade-Oriented

Contests, dealer incentives

Trade allowances

Point-of-purchase displays

Training programs

Trade shows

Cooperative advertising


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Objectives of Consumer-Oriented

Sales Promotion

To Obtain Trial and Repurchase

To Increase Consumption of an Established

Brand

To Defend (Maintain) Current Customers

To Target a Specific Segment

Enhance IMC programs and build brand

equity


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Advantages and Limitations of

Coupons

Advantages: Appeal to price

sensitive consumer

Can offer price break

without retailers coop

Can be effective way

to induce trial of new of

existing products

Can be a way to defend

market share andencourage repurchase

Disadvantages Difficult to determine how

many consumers will use

coupons and when

Coupons are often used by

loyal consumers who maypurchase anyway

Declining redemption rates

and high costs of couponing

Misredemption and fraud


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Distribution of Coupons

Through ads, DM / press / on-pack and also by the scanner tocompetitive brand users

Coupon ads should - Reinforce the positioning - highlight brand strength and key benefits

emphasised in the ad

Be convenient to clip, show package prominently and have themandatory legal copy

Placed in /on packto build repeat purchase & loyalty

Placed on other products Cross-ruff to attract new customers

DM coupons are more targeted, have higher redemption Scanner dispensed coupons attract other brand users

Cash rebates (on durables) on proof of purchase


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Coupon Fraud

Consumers redeem without purchase

Clerks and staff exchange for cash

Managers/owners redeem without sale

Criminals collect or counterfeit andsell


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Coupon Trends

Major companies cutting back on useof coupons

Searching for more effective coupontechniques

More use of internet for distribution


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Sampling

Sampling works best when:

The products are of relatively low unit value, so samples

dont cost much The purchase cycle is relatively short so the consumer

can purchase in a relatively short time period

The products are divisible and can be broken into small

sizes that can reflect the products features and benefits There is enough quantity for the consumer to try a

product, (but keep packaging & mailing expenses down)

Providing consumer with some quantity of a

product for no charge to induce trial


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Sampling Methods

Door-to-door

Direct mail

In-store sampling

Cross-product sampling

With newspaper or magazine

Through the internet

Sampling is more effective after an introductory set ofads giving a toll free number to call for samples


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Premiums

Two types of premiums: (in pack / mailed on proofof purchase at no cost)Free premiums -

only require purchase of the product

Self-liquidating premiums -

require consumer to pay some or all of the cost of the premium

Reinforces brand image

Builds repeat purchase / brand loyalty

Premium an offer of an item of merchandise

or service either free or at a low cost thatis an extra incentive for customers


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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

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 determinedby random selection from the pool of entries or generation

of a number to match those held by game entrants.

Can reinforce brands advertising platform if appropriately designed


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Other Popular Consumer Sales

Promotion Tools

Price packs offer lower price than usual or greaterquantity than usualBonus Packs For value enhancing items more

quantity packs are better than price-offs promotions

Price-off deals - Induces switching and reinforces loyalty

Refunds and Rebates

Event marketing

Frequency/loyalty programs

Subsidised financing / Reduced EMI incentive for durables


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CFB Promotional ObjectivesCommunicate distinctive brand attributes

Develop and reinforce brand identity that is consistent

with the image of the brand

Build long-term brand preferenceEncourage repeat purchase and long-term patronage

Engage active consumer involvement

Consumer Franchise-Building

(CFB) Promotions

Consumer Franchise Building Promotions Communicatedistinctive brand attributes and contribute to the development

and reinforcement of brand identity and image


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Nonfranchise-Building (non-FB)

Promotions

Non-FB Promotions May Include Price-off deals Bonus packs Rebates or refunds

Non-FB Promotions shortcomings Trade promotions benefits may not reach customers Customers may buy on the basis of price rather than brand equity Do not encourage the development of brand loyalty

Nonfranchise-building promotions - Accelerate the purchasedecision process and generate an immediate sales increase but donot contribute to the building of brand identify and image


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Trade-Oriented Sales Promotion

Objectives

Obtain Distribution of New Products

Maintain Trade Support for Existing Products

Encourage Retailers to Display and Promote Existing Brand

Build Retail Inventories Stock and buy more stocks Move goods from warehouse to shelf

Can erode brand franchise & image if advertising spends are reduced (commodity / parity product image) or is not brand enhancing


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Types of Trade-Oriented Promotions

Contests and Incentives

Trade Allowances

Buying Allowances

Promotional Allowances

Slotting Allowances

Point-of-Purchase Displays

Sales Training Programs

Trade ShowsCooperative Advertising


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Trade Allowances

Off-invoice / buying allowance

Count-recount allowances

Billback allowances

Display allowances in-ad grocer coupon

Slotting and facing allowances

Trade inventory financing and delayed billing Sweepstakes, contests, etc for retail sales people


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Trade Allowances

Off-invoice or buying allowance - % price-cut applied tovolumes purchased during promotional period. (Freegoods may be offered instead)Applies Push pressure to sell stocks picked-up

Count-recount allowances for shifting the stocks fromthe warehouse to the shelfPressure to pass the price cut to the consumer

Billback allowances allowance paid if certainperformance criteria is metFor Displays Ads in retailer publications etc

Display allowances - to display products prominently Time pressed customers pick up brands made salient this way


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Trade Allowances

In-ad grocer coupon - in the retailers circular. Co

pays for coupon face-value & handling costs

Slotting & facing allowances one time fee paid to

place new brand on shelf to cover cost of space,

admn. & risk

Trade inventory financing & delayed billing- used

for durables reduced rate financing / delayed billing Sweepstakes, contests for retail sales people. Timed

to run along with sales promos


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Problems with Trade Allowances

Marketers expect that the savings will be passed on tothe consumer in the form of lower prices. However,

the trade members often pocket discounts

Two practices that are particularly bothersome forward buying

and diverting

To deal with these trade problems, companies have

adopted a policy of Everyday Low Pricing (EDLP) the list price is lowered

and trade promotional allowances are reduced / eliminated


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Promotion Targeted to Reseller

SalespeopleProduct or program sales

Selling a specific number of cases

Selling a specific number of units

Selling a specific number of promotional programs

New account placements Number of new accounts opened

Number of new accounts ordering a minimum amount

Promotional programs placed in new accounts

Merchandising efforts Establishing promotional programs

Placing display racks, counter and other p-o-p displays


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Types of Cooperative Advertising

Horizontal cooperate advertising

Ingredient-sponsored cooperative

advertising

Vertical cooperative advertising


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Retailerspromotions

Consumer Promotions used by retailers to

clear inventory out of style, slow moving,

shelf-unstable products


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CFB Promotional Objectives

Communicate distinctive brand attributesDevelop and reinforce brand identity that is consistent

with the image of the brand

Build long-term brand preference

Encourage repeat purchase and long-term patronage

Engage active consumer involvement

Consumer Franchise-Building

(CFB) Promotions

Consumer Franchise Building Promotions Communicatedistinctive brand attributes and contribute to the development

and reinforcement of brand identity and image

N f hi B ildi ( FB)


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Nonfranchise-Building(non-FB)

Promotions

Non-FB Promotions May Include

Price-off deals Bonus packs Rebates or refunds

Non-FB Promotions shortcomings Trade promotions benefits may not reach customers

Customers may buy on the basis of price rather than brand

equity Do not encourage the development of brand loyalty

Nonfranchise-building promotions - Accelerate the purchasedecision process and generate an immediate sales increase but donot contribute to the building of brand identify and image


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AllOth

ers

MaintainPromotions

MaintainPromotions

Cut BackPromotions

Cut BackPromotions

Our Firm

We losemarket share

Same marketshare, profits

stay low

Higher profitsfor everyone

We gain inmarket share

The Sales Promotion Dilemma


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Evaluation and Risks

Consumer Promotions

Advtg and SP play a complementary role and

when run in tandem they yield powerful synergies

Delivers additional brand value and Induces trial & repeat purchase

Breaks through clutter

SP can hurt the image of the brand equity

if run in isolation of advertising

if poorly designed

if protracted -particularly true for highly involvement,

image & feeling products


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Evaluation-Risks

Trade Promotions

Advtg. Campaign, Consumer SP and TP if run in

tandem yield powerful synergies

TP erode brand franchise and image leading to

less leverage with the trade

Because of less ad spend If promos are not brand enhancing


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Coordinating Sales Promotion With

Other IMC Elements

Budget allocation - It depends on the promotional objectives of the campaign

the market and competitive situation

the brands stage in its life cycle

Media support and timingCoordination of ad and promotion themes

Measuring effectiveness

Various IMC elements such as advertising, direct marketing,Internet and personal selling efforts need to be coordinated with

sales promotion to create asynergistic effect. Must consider:

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