16. sales promotion

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  • Chapter Sixteen Sales Promotion © 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
  • Relation to text This slide relates to material on pp. 495 of the text and provides a definition of sales promotion. Summary Overview Sales promotion is an inducement or incentive to the sales force, distributors, or ultimate customer with the primary objective of creating immediate sales. There are three important aspects of sales promotion: Extra incentive to buy – coupons, rebates, premium provide extra reason to buy Tool to speed up sales – acceleration tool designed to shorten the purchase cycle Targeted to different parties – can be targeted to consumers or to the trade Use of this slide This slide can be used to introduce sales promotion and its role in the overall IMC program. Attention should be given to these three important aspects of sales promotion.
  • Relation to text This slide relates to material on pp. 497-501 of the text. Summary Overview This slide summarizes the reasons for the growth in sales promotion. These are: Growing power of retailers – manufacturers used to have most of the power, now retailers through technology, consolidation, and private labeling have more power Declining brand loyalty – consumers are purchasing more on the basis of price and value Increased promotional sensitivity – consumers want to save money and respond well to promotions that provide them the opportunity to do so Brand proliferation – many new brands that offer little differentiation Fragmentation of consumer markets – traditional mass media advertising has become less effective and promotions are a way to reach market segments Short-term focus of marketers – sales promotion is seen as a way of generating an immediate increase in sales Increased accountability – pressure on managers to produce sales results Competition – the use of promotions is seen as way to gain a competitive advantage Clutter – promotional offers can breakthrough and attract attention Use of this slide This slide can be used to discuss the reasons for the increase in the use of sales promotion and the associated shift away from mass media advertising. In addition to the factors mentioned above another reason for the increase in spending is that the promotion industry has become more sophisticated and plays a more strategic role in the IMC program of many companies.
  • Relation to text This slide relates to material on pp. 495-496 and Figure 16-1 of the text. Summary Overview Sales promotion can be broken into two major categories, consumer-oriented promotion and trade-oriented promotion. This slide shows the various types of activities of each. Consumer-oriented Samples Coupons Premiums Contests/sweepstakes Refunds/rebates Bonus packs Price-off deals Frequency programs Event marketing Trade-oriented Contests, dealer incentives Trade allowances Point-of-purchase displays Training programs Trade shows Cooperative advertising Use of this slide This slide can be used to show the various tools that can be used for consumer and trade-oriented promotions. Consumer-oriented promotions are generally used as part of a push channel strategy while trade-oriented promotions are part of a pull strategy.
  • Relation to text This slide relates to material on pp. 495-496 and Figure 16-1 of the text. Summary Overview Sales promotion can be broken into two major categories, consumer-oriented promotion and trade-oriented promotion. This slide shows the various types of activities of each. Consumer-oriented Samples Coupons Premiums Contests/sweepstakes Refunds/rebates Bonus packs Price-off deals Frequency programs Event marketing Trade-oriented Contests, dealer incentives Trade allowances Point-of-purchase displays Training programs Trade shows Cooperative advertising Use of this slide This slide can be used to show the various tools that can be used for consumer and trade-oriented promotions. Consumer-oriented promotions are generally used as part of a push channel strategy while trade-oriented promotions are part of a pull strategy.
  • Relation to text This slide relates to material on pp. 503-507 of the text. Summary Overview This slide outlines some of the objectives of consumer-oriented sales promotion programs. These objectives include: To obtain trial and purchase To increase consumption of an established brand To defend (maintain) current customers To target a specific segment Enhance IMC efforts and build brand equity Use of this slide This slide can be used to discuss the various objectives marketers have in using consumer-oriented sales promotions and what companies hope to accomplish by using them. While the basic goal of most consumer-oriented sales promotion programs is to induce purchase, these other objectives for both new and established brands should be considered.
  • Relation to text This slide relates to material on pp. 507-509 of the text. Summary Overview Sampling involves giving the consumer some quantity of the product at no charge to induce trial. This slide outlines three criteria for an effective sampling program. These include: The products are relatively low unit value, so samples do not cost much The products are divisible and can be broken into small sizes that can reflect the products features and benefits The purchase cycle is relatively short so the consumer can purchase in relatively short time period Use of this slide This slide can be used to discuss sampling as a sales promotion technique. Manufacturers of packaged-goods products such as food, health care items, cosmetics, and toiletries, are heavy users of sampling since their products meet the three criteria for an effective sampling program. As a sales promotion technique, sampling is commonly used to introduce a new product or brand to the market.
  • Relation to text This slide relates to material on pp. 509-510 of the text. Summary Overview A basic decision of the brand or sales promotion manager is how the sample will be distributed. This slide lists the various options available for distributing samples to consumers. These include: Door-to-door Direct mail Central location distribution In-store sampling Cross-product sampling Co-op package distribution With newspaper/magazine Event sampling Internet sites Use of this slide This slide can be used to discuss the various ways samples can be distributed to the consumer. The sampling method is important for two reasons: 1) the cost of the distribution, and 2) because the method can control the type of consumer who receives the sample. As such, the distribution method should be considered carefully when deciding on a sampling program.
  • Relation to text This slide relates to material on pp. 516-517 of the text, which discusses premiums. Summary Overview This slide defines premiums which are an offer of an item of merchandise or service either free or at a low cost that is an extra incentive for customers. There are two basic types of premiums: Free premiums – small gifts or merchandise included in the product package Self-liquidating premiums – require customer to pay for some or all of the cost of the premium Use of this slide This slide can be used to introduce premiums as a sales promotion tool. Packaged carried premiums have high impulse value and can provide an extra incentive to buy the product. Free premiums have become very popular in the fast food restaurant industry as companies such as McDonalds and Burger King use premiums in their kids meals to attract children. Self-liquidating premiums are designed to not necessarily make money, but rather to cover costs and offer value to the consumer.
  • Relation to text This slide relates to material on pp. 518-519 of the text. Summary Overview Contests and sweepstakes are an increasingly popular consumer-oriented promotion. There are differences between contests and sweepstakes as stated. Contest – consumers compete for prizes or money on the basis of skill or ability, proof of purchase is generally required to enter or an entry form must be used Sweepstake – winners are determined purely by chance and no proof of purchase is required to enter Use of this slide This slide can be used to discuss the use of contests and sweepstakes. They are increasing in popularity as these promotions have appeal and glamour that other sales promotion tools such as cents-off coupons lack. Marketers like these type of promotions because they are perceived to be exciting and attract large numbers of consumers.
  • Relation to text This slide relates to material on pp. 524-525 and Figure 16-5 of the text. Summary Overview This slide outlines which sales promotion tools can be used to accomplish various objectives of marketers and identifies whether the extra incentive or reward is immediate or delayed. Use of this slide This slide can be used to discuss the use of consumer-oriented sales promotion tools for achieving various marketing objectives . Note that some of the sales promotion techniques are listed more than once because they can be used to accomplish more than one objective.
  • Relation to text This slide relates to material on pp. 527-533 of the text. Summary Overview Manufacturers use a variety of trade promotion tools as inducements for wholesalers and retailers. These promotions include: Contests and incentives – can be directed toward managers and/or employees at the wholesale or retail level Trade allowances – discount or deal to stock, promote or display manufacturer’s product Buying allowances – price reduction during a fixed period Promotional allowances – discounts for promotional activities Slotting allowances – retailers charge fees for a slot or position on shelf Point-of-purchase displays – various in-store displays used to sell products Sales training programs – assisting in sales training programs for reseller personnel Trade shows – forum where manufacturers can display products Cooperative advertising – cost of advertising is shared by more than one intermediary Use of this slide This slide can be used to discuss the various types of trade promotions. Many of these are often used to encourage the various marketing intermediaries to assist the manufacturer in the sale of product.
  • Relation to text This slide relates to material on pp. 525-527 of the text that discusses trade promotion. Summary Overview Trade-oriented sales promotion is targeted to marketing intermediaries such as wholesalers and retailers. There are several reasons promotions are targeted to the trade, which include: Obtain distribution of new product Maintain trade support for existing products Encourage retailers to display existing brands Build retail inventories Use of this slide This slide can be used to introduce trade-oriented sales promotion. Like consumer oriented sales promotion, sales promotion programs targeted to the trade should be based on well-defined objectives and measurable goals and a consideration of what the marketer wants to accomplish .
  • 16. sales promotion

    1. 1. Sales Promotion © 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
    2. 2. 1. Defining Sales Promotion“A direct inducement that offers an extra“A direct inducement that offers an extravalue or incentive for the product to the salesvalue or incentive for the product to the salesforce, distributors, or the ultimate consumerforce, distributors, or the ultimate consumerwith the primary objective of creating anwith the primary objective of creating animmediate sale.”immediate sale.” An extra An extra A tool to A tool toincentive to buyincentive to buy speed up sales speed up sales Targeted to Targeted to different parties different parties © 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
    3. 3. 2. Reasons for Increase in Sales Promotion Growing power of retailers Growing power of retailersReasonsReasons Declining brand loyalty Declining brand loyalty Increased promotional sensitivity Increased promotional sensitivity Brand proliferation Brand proliferation Fragmentation of consumer markets Fragmentation of consumer markets Short-term focus of marketers Short-term focus of marketers Increased accountability Increased accountability Competition Competition Clutter Clutter © 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
    4. 4. 3. Sales Promotion Vehicles Consumer-Oriented Trade-Oriented © 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
    5. 5. 3. Sales Promotion Vehicles Consumer-Oriented Samples Samples Coupons Coupons Premiums Premiums Contests/sweepstakes Contests/sweepstakes Refunds/rebates Refunds/rebates Bonus Packs Bonus Packs Price-off deals Price-off deals Frequency programs Frequency programs Event marketing Event marketing © 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
    6. 6. Objectives of Consumer- Oriented Sales Promotion To increase To increase consumption of consumption of an established an established brand brand To defend To defendTo obtain trialTo obtain trial (maintain) (maintain)and purchase and purchase current current Objectives Objectives customers customers Enhance IMC Enhance IMC To target a To target a efforts and build efforts and build specific segment specific segment brand equity brand equity © 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
    7. 7. Sampling Sampling Works Best Sampling Works Best When When The purchase The purchase The products are The products are cycle is cycle is The products The products divisible and can divisible and can relatively short relatively shortare of relativelyare of relatively be broken into be broken into so the so the low unit value, low unit value, small sizes that small sizes that consumer can consumer can so samples so samples can reflect the can reflect the purchase in a purchase in adon’t cost muchdon’t cost much products features products features relatively short relatively short and benefits and benefits time period time period © 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
    8. 8. Sampling Methods Door-to-door Door-to-doorMethodsMethods Direct mail Direct mail Central location distribution Central location distribution In-store sampling In-store sampling Cross-product sampling Cross-product sampling Co-op package distribution Co-op package distribution With newspaper/magazine With newspaper/magazine Event sampling Event sampling Internet sites Internet sites © 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
    9. 9. Premiums Premium: an offer of an item of Premium: an offer of an item of merchandise or service either free or merchandise or service either free or at a low cost that is an extra at a low cost that is an extra incentive for customers incentive for customers Two Types of Premiums Two Types of Premiums Self-liquidating Self-liquidatingFree Premiums:Free Premiums: Premiums: require Premiums: requireOnly require purchaseOnly require purchase consumer to pay some consumer to pay someof the productof the product or all of the cost of the or all of the cost of the premium premium © 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
    10. 10. Contests and SweepstakesContest: a promotion where consumers compete forContest: a promotion where consumers compete forprizes or money on the basis of skills or ability. Winnersprizes or money on the basis of skills or ability. Winnersare determined by judging entries or ascertaining whichare determined by judging entries or ascertaining whichentry comes closes to some predetermined criteriaentry comes closes to some predetermined criteriaSweepstakes/games: a promotion where winners areSweepstakes/games: a promotion where winners aredetermined purely by chance and cannot require a proofdetermined purely by chance and cannot require a proofof purchase as a condition for entry. Winners are chosenof purchase as a condition for entry. Winners are chosenby random selection from a pool of entries or generationby random selection from a pool of entries or generationof a number to match those held by game entrants.of a number to match those held by game entrants. © 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
    11. 11. Summary of Consumer-Oriented Promotions andMarket Objectives © 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
    12. 12. Types of Trade-Oriented Promotions Contests and Contests and Incentives Incentives Buying Buying Trade Allowances Trade Allowances Allowances Allowances Point-of-Purchase Point-of-Purchase Promotional Displays Promotional Displays Allowances Allowances Sales Training Sales Training Programs Programs Slotting Slotting Allowances Allowances Trade Shows Trade Shows Cooperative Cooperative Advertising Advertising © 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
    13. 13. Trade-Oriented Sales PromotionObjectives Maintain trade Maintain tradeObtain distribution ofObtain distribution of support for existing support for existing new products new products products products Objectives Objectives Encourage retailers Encourage retailers Build retail Build retail inventories to display to display inventories existing brands existing brands © 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin

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