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Chapter 15

Chapter 15. Sales Promotions. Sales Promotion.

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Chapter 15

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  1. Chapter 15 Sales Promotions

  2. 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.”

  3. Reasons for the Growth of Sales Promotion Assessment of Sales Promotion is Relatively Easy. Sales Managers are Under Great Pressure to Produce Results Quickly. Why Are Companies Spending More and More Money on Sales Promotion? Cost for Results In This Industry Are Relatively Low. Sales Promotion Strategies Target Consumer, Trade, and The Sales Force.

  4. 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. Promotion Strategies

  5. Sales Promotion Strategies Objectives Intended to Change Consumer Behavior Building Brands Can be Used to Build Brand Images, But May be Long-Term Introducing New Products Advertising and Promotion Work Well Together Here Using Push & Pull Strategies

  6. Consumer-Oriented Promotions Samples Coupons Consumer- Oriented Promotion Premiums Contests/sweepstakes Refunds/rebates Bonus packs Price-offs Event sponsorship

  7. Objectives of Consumer-Oriented Sales Promotion • Obtaining trial and repurchase • Increasing consumption of an established brand • Defending current customers • Targeting a specific market • Enhancing advertising and marketing efforts

  8. 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

  9. Disadvantages of Coupons • Difficult to estimate redemption rates (<2%) • May be redeemed by loyal users who would buy anyway • Expensive • Misredemption and fraud

  10. Contests Compete for a Prize Based On Some Skill or Ability Generates High Degree Of Consumer Involvement Can Help Revive Lagging Sales Contests and Sweepstakes Sweepstakes Participants Submit Names To Be Included in Drawing Game – Type of Sweepstakes; Time Frame Much Longer

  11. Advantages of Sweepstakes and Contests • Effective way of getting the consumer to become involved with the brand by making the promotion product relevant • Generate interest in or excitement over a brand and attracting attention to advertising • Effective way of dealing with specific marketing problems

  12. 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

  13. Station Break • Go 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.

  14. Refunds and Rebates A Marketer’s Offer to Return a Certain Amount Of Money to the Consumer Who Purchases the Product. i.e cash rebate + low-value coupon Premiums Tangible Reward for Performing a Particular Act. Direct – Received At Time of Purchase Mail – Proof of Purchase & Payment Be Mailed In Refunds, Rebates, and Premiums

  15. Allowing the Customer to Experience the Product or Service. Very Effective Strategy for Introducing A New or Modified Product. Most Common Method of Distributing Samples is Through the Mail. 9 Out of 10 Customers Prefer a Sample To a Cents-Off Coupon to Introduce Product. Sampling

  16. Trade Promotions • Trade 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.

  17. Types of Trade Promotions Point-of-Purchase Trade Deals Retailer Kits Trade Incentives Contests Exhibits Sweepstakes Trade Shows

  18. Promotion Integration (Tab. 15.5)

  19. 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

  20. Display Distributed to Retailers Used to Call Customer’s Attention to Product Promotions. Some of the Most Popular POP Tools & Techniques Carton Displays Special Racks Banners Signs Price Cards Mechanical Product Dispensers Point-of-Purchase Displays $12 Billion Business; Second Largest Category of Sales Promo Expenditures.

  21. Trade Promotions Contests & Sweepstakes 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. Trade Shows & Exhibits Advertisers Can Develop Contests & Sweepstakes to Motivate Resellers. Occasional Use Only is Effective. Allow Product Demonstrations, Provide Information, & Answer Questions. $16.5 Billion is Spent Annually.

  22. $8 to $12 Billion Business Annually Designed for Special Trade Promotional Circumstances. Trade Incentives and Deals Incentive Programs i.e. Used When Introducing A New Product. Types Include Bonuses & Dealer Loadings Trade Deals Most Important Reseller Sales Promo Technique. Types Include Buying & Advertising Allowances

  23. 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, and • arts.

  24. 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.

  25. Build Brands; Creating Both Awareness and Reminders Specialty Advertising Includes Everything From Hats With Logos to T-shirts, & Mousepads Third Largest Category of Promotional Spending Normally Have a Promotional Message Printed Somewhere

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