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Marketing Essentials        WEEK 5    Sales Promotions
Sales Promotions
Sales Promotions      A barking dog is often more useful             than a sleeping lion.”                   ~ Washington...
Sales PromotionsCommon types of sales promotions• Discounts (Price Deals)• Coupons• Sweepstakes/Contests• Buy One - Get On...
Sales PromotionsMore than any other element of the marketing mix,        sales promotion is about ACTION.It’s about stimul...
Sales PromotionsDefinitionMedia and non-media marketing pressureapplied for a predetermined, limited period oftime in orde...
Sales PromotionsPrice-Value Relationship• Every product or service has an establishedperceived price or value• Sales promo...
Sales PromotionsTarget Audiences for Sales Promotions• Consumers• Resellers• Company Sales Force
Sales PromotionsCompared to the other components of themarketing mix - Advertising, Publicity, Events -Sales Promotion com...
Sales PromotionsWhen to use Sales PromotionsWhere do sales promotions fall in the overallmarketing mix?•   Marketing budge...
Sales PromotionsWhen to use Sales PromotionsMarketing budgetSales promotions are particularly attractivealternatives when ...
Sales PromotionsWhen to use Sales PromotionsProduct life cycle stage                           Often used in the growth   ...
Sales PromotionsWhen to use Sales PromotionsCompetition in the marketAn effective tool in a highly competitive market,when...
Sales PromotionsWhen to use Sales PromotionsTarget AudienceIs your customer sensitive to the price/valuerelationship that ...
Sales PromotionsWhen to use Sales PromotionsType of productSales Promotions tend to work best whenapplied to impulse items...
Sales PromotionsDiscounts/Price Based Promotions
Sales PromotionsDiscounts/Price Based PromotionsPrice deals are usually intended to:• Encourage trial of a new product or ...
Sales PromotionsDiscounts/Price Based PromotionsWays to Implement:•   In-Store/POP Displays•   Advertising•   Direct Mail•...
Sales PromotionsDiscounts/Price Based Promotions• Increased sales gained from price-basedpromotions are usually at the exp...
Sales PromotionsCoupons
Sales PromotionsCouponsThe first coupon was created in 1887 by AsaChandler, one of the partners at Coca-Cola. By1931, it’s...
Sales PromotionsCouponsIn 2009 there were $528.5 billion worth ofcoupons available; yet only $3 billion worth ofcoupons we...
Sales PromotionsCouponsThe key objective with a coupon promotion is to        maximize the redemption rate - the proportio...
Sales PromotionsCoupons          Average Redemption Rate = ???              Average face value = ???                    (P...
Sales PromotionsCoupons Distribution Methods •   On-Package (encourage trial or repeat purchase) •   Print Advertising: Ne...
Sales PromotionsCoupons Distribution Methods • Mobile Phone
Sales PromotionsCoupons • May simply encourage customers to buy what they would have bought anyway • Can cause customer di...
Sales PromotionsSweepstakes & Contests
Sales PromotionsSweepstakes & Contests        What’s the difference between a         Sweepstakes and a Contest???
Sales PromotionsSweepstakes & Contests - What’s the Difference?Contest: Audience applies skill, analytical orcreative thin...
Sales PromotionsSweepstakes & Contests - What’s the Difference?Sweepstakes: A promotion in which winners aredetermined pur...
Sales PromotionsSweepstakes & ContestsContests and sweepstakes often createexcitement and generate interest for a brand,cr...
Sales PromotionsBuy One > Get One (BO-GO)
Sales PromotionsBuy One > Get One Free Vs. 50% OffExample #1• Sell 1 Pizza for $20 / Cost = $2.50Buy One > Get One FREE2 P...
Sales PromotionsBuy One > Get One Free OR 50% OffExample #2• Sell 1 Pizza for $20 / Cost = $2.50Buy One > Get One FREE2 Pi...
Sales PromotionsGift With Purchase / Premium Promotions
Sales PromotionsGift With Purchase / Premium Promotions             “The prize in a cereal box”
Sales PromotionsGift With Purchase / Premium Promotions• Commonly found with magazine subscriptions,cigarettes, cosmetics ...
Sales PromotionsGift With Purchase / Premium Promotions
Sales PromotionsGift With Purchase / Premium Promotions• The premium may be given for free or offeredto consumers for a si...
Sales PromotionsGift With Purchase / Premium PromotionsMeasurement and Evaluation• Increase Sales• Increase customer goodw...
Sales PromotionsLoyalty/Frequent Buyer Programs
Sales PromotionsLoyalty/Frequent Buyer ProgramsEncourage and reward repeat purchases byacknowledging each purchase made an...
Sales PromotionsLoyalty/Frequent Buyer ProgramsDecide what you want to accomplish:• Reward customers for their frequency a...
Sales PromotionsLoyalty/Frequent Buyer ProgramsEnrollment Tactics:• Simple form that collects buyer info such asaddresses,...
Sales PromotionsLoyalty/Frequent Buyer ProgramsProgram Structure:Reward the behavior YOU desire, not what thecustomer desi...
Sales PromotionsLoyalty/Frequent Buyer ProgramsProgram Structure:Points: Buyers earn points for every dollar theyspend. Yo...
Sales PromotionsLoyalty/Frequent Buyer Programs
Sales Promotions
Sales PromotionsResourceswww.promo.comwww.pmalink.org Promotion Marketing Assocwww.couponpros.org Assoc of Coupon Professi...
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Marketing Essentials: Sales Promotions

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Promotions can be an effective tool for driving traffic and increasing sales. We explore several options for creating promotional campaigns, including discounting, "buy one, get one" strategies, incentives/frequent buyer programs, holiday themed promotions, time sensitive promotions and more. The goal is to identify a set of promotional tools that can be effective in accomplishing short-term and long-term sales goals, without negatively impacting profit margins.

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Marketing Essentials: Sales Promotions

  1. 1. Marketing Essentials WEEK 5 Sales Promotions
  2. 2. Sales Promotions
  3. 3. Sales Promotions A barking dog is often more useful than a sleeping lion.” ~ Washington Irving
  4. 4. Sales PromotionsCommon types of sales promotions• Discounts (Price Deals)• Coupons• Sweepstakes/Contests• Buy One - Get One (BO-GO)• Gift with Purchase (Premiums)• Incentive / Frequent Buyer• Holiday / Themed Promotions• Others: In-store displays, sampling, bundling,rebates, trade-ins, free trial/demo
  5. 5. Sales PromotionsMore than any other element of the marketing mix, sales promotion is about ACTION.It’s about stimulating customers to buy a product.
  6. 6. Sales PromotionsDefinitionMedia and non-media marketing pressureapplied for a predetermined, limited period oftime in order to stimulate trial, increaseconsumer demand, or improve product quality.(American Marketing Association)
  7. 7. Sales PromotionsPrice-Value Relationship• Every product or service has an establishedperceived price or value• Sales promotions change this price-valuerelationship by increasing the value and/orlowering the price.
  8. 8. Sales PromotionsTarget Audiences for Sales Promotions• Consumers• Resellers• Company Sales Force
  9. 9. Sales PromotionsCompared to the other components of themarketing mix - Advertising, Publicity, Events -Sales Promotion commonly:• Operates on a shorter time line• Uses a more rational appeal• Returns a tangible or real value• Fosters an immediate sale• Contributes highly to profitability
  10. 10. Sales PromotionsWhen to use Sales PromotionsWhere do sales promotions fall in the overallmarketing mix?• Marketing budget• Product life cycle stage (New Vs. Old)• Competition in the market• Target Audience• Type of product
  11. 11. Sales PromotionsWhen to use Sales PromotionsMarketing budgetSales promotions are particularly attractivealternatives when the marketing budget islimited, as it is for many small businesses.
  12. 12. Sales PromotionsWhen to use Sales PromotionsProduct life cycle stage Often used in the growth and maturity stages to stimulate consumers to choose the product over the competition rather than in the introduction stage when building awareness (via Advertising/PR) is usually more important.
  13. 13. Sales PromotionsWhen to use Sales PromotionsCompetition in the marketAn effective tool in a highly competitive market,when the objective is to convince retailers tocarry your product or to influence consumers toselect it over the competition.
  14. 14. Sales PromotionsWhen to use Sales PromotionsTarget AudienceIs your customer sensitive to the price/valuerelationship that exists in your category?Sales Promotions can often encourage trialusage which leads to brand affinity, but youmust deliver on the quality.
  15. 15. Sales PromotionsWhen to use Sales PromotionsType of productSales Promotions tend to work best whenapplied to impulse items whose features can bejudged at the point of sale, rather than morecomplex items that might require a longerpurchase cycle (research/comparisons) or ahands-on demonstration.
  16. 16. Sales PromotionsDiscounts/Price Based Promotions
  17. 17. Sales PromotionsDiscounts/Price Based PromotionsPrice deals are usually intended to:• Encourage trial of a new product or extension• Recruit new buyers for a mature product• Convince existing customers to increasepurchases, accelerate their use or purchasemultiple units.
  18. 18. Sales PromotionsDiscounts/Price Based PromotionsWays to Implement:• In-Store/POP Displays• Advertising• Direct Mail• Event• Associations / Groups• Seasonal / Themed• Referrals• Group-buying (Groupon/Living Social/Amazon)
  19. 19. Sales PromotionsDiscounts/Price Based Promotions• Increased sales gained from price-basedpromotions are usually at the expense of profits• Company must also guard against the possiblenegative effect of discounting on brand image
  20. 20. Sales PromotionsCoupons
  21. 21. Sales PromotionsCouponsThe first coupon was created in 1887 by AsaChandler, one of the partners at Coca-Cola. By1931, it’s estimated that 1 in 9 Americans hadreceived one of these free Coca-Colas.
  22. 22. Sales PromotionsCouponsIn 2009 there were $528.5 billion worth ofcoupons available; yet only $3 billion worth ofcoupons were redeemed
  23. 23. Sales PromotionsCouponsThe key objective with a coupon promotion is to maximize the redemption rate - the proportion of customers actually using the coupon Vs. what was distributed.• Measure short term Vs. long term sales impact• Coupon promotions are often used for newproducts or to encourage sales of existingproducts that are slowing down
  24. 24. Sales PromotionsCoupons Average Redemption Rate = ??? Average face value = ??? (Promotion Marketing Association)
  25. 25. Sales PromotionsCoupons Distribution Methods • On-Package (encourage trial or repeat purchase) • Print Advertising: Newspaper/Magazine • Back of receipts • Free Standing Inserts (FSI) • Online/Email • Direct Mail (ex: ValPak) • Events • Mobile Phone
  26. 26. Sales PromotionsCoupons Distribution Methods • Mobile Phone
  27. 27. Sales PromotionsCoupons • May simply encourage customers to buy what they would have bought anyway • Can cause customer disappointment if retailers do not hold sufficient stock of the promoted product
  28. 28. Sales PromotionsSweepstakes & Contests
  29. 29. Sales PromotionsSweepstakes & Contests What’s the difference between a Sweepstakes and a Contest???
  30. 30. Sales PromotionsSweepstakes & Contests - What’s the Difference?Contest: Audience applies skill, analytical orcreative thinking to try to win a prize. Winnersare determined by judges or by which contestantcomes closest to a predetermined criteria. ONE PROFESSIONAL & AMATEUR FIRST PLACE WINNER in each category will receive a prize package including: * A $100 B&H gift card * $100 certificate for Canson Infinity media * A DSLR camera * A PhotoServe portfolio ($860 value) * A Crumpler bag * A PDN PhotoPlus Expo Gold Expo Pass * A subscription to PDN®
  31. 31. Sales PromotionsSweepstakes & Contests - What’s the Difference?Sweepstakes: A promotion in which winners aredetermined purely by chance.
  32. 32. Sales PromotionsSweepstakes & ContestsContests and sweepstakes often createexcitement and generate interest for a brand,create great content, can go “viral,” but…• Time consuming• Expensive• No guarantee of success• Legal Issues• Hard to accurately measure impact on sales• May lose focus of the brand• Fail to build long-term brand affinity
  33. 33. Sales PromotionsBuy One > Get One (BO-GO)
  34. 34. Sales PromotionsBuy One > Get One Free Vs. 50% OffExample #1• Sell 1 Pizza for $20 / Cost = $2.50Buy One > Get One FREE2 Pizzas for $20 = $15 Profit($20-$5 = $15)Give 50% OFF1 Pizza for $10 = $7.50 Profit($10-$2.50 = $7.50)
  35. 35. Sales PromotionsBuy One > Get One Free OR 50% OffExample #2• Sell 1 Pizza for $20 / Cost = $2.50Buy One > Get One FREE2 Pizzas for $20 = $15 Profit($20-$5 = $15)Buy One > Get One 50% OFF2 Pizzas for $30 = $25 Profit($30-$5 = $25)
  36. 36. Sales PromotionsGift With Purchase / Premium Promotions
  37. 37. Sales PromotionsGift With Purchase / Premium Promotions “The prize in a cereal box”
  38. 38. Sales PromotionsGift With Purchase / Premium Promotions• Commonly found with magazine subscriptions,cigarettes, cosmetics and fragrances• Ability to partner with affiliated brands orproducts; can you barter?• Can introduce new products or line extensionsthrough relevant promotional items
  39. 39. Sales PromotionsGift With Purchase / Premium Promotions
  40. 40. Sales PromotionsGift With Purchase / Premium Promotions• The premium may be given for free or offeredto consumers for a significantly reduced price• Set “purchase targets” - buy a certain quantityor dollar amount to receive free gift• Instant gratification• No confusion about returning coupons or proofof purchase.
  41. 41. Sales PromotionsGift With Purchase / Premium PromotionsMeasurement and Evaluation• Increase Sales• Increase customer goodwill• Retail / employee excitement about yourproduct and offer• Generate repeat store visits or purchases• Faster sell-through• Gather Customer data
  42. 42. Sales PromotionsLoyalty/Frequent Buyer Programs
  43. 43. Sales PromotionsLoyalty/Frequent Buyer ProgramsEncourage and reward repeat purchases byacknowledging each purchase made and offeringa premium as purchases accumulate• Airlines• Grocery & Drug Stores• Car Wash• Hair Salons
  44. 44. Sales PromotionsLoyalty/Frequent Buyer ProgramsDecide what you want to accomplish:• Reward customers for their frequency andincreased spending.• Design a tiered structure that rewards heavybuyers with privileges & special offers• Shift the pattern of frequent buyers behaviorby offering incentives and rewards for buying onoff-peak hours or days.
  45. 45. Sales PromotionsLoyalty/Frequent Buyer ProgramsEnrollment Tactics:• Simple form that collects buyer info such asaddresses, phone and email• Create a "New Membership Kit" which includesrules, awards, points, privileges, etc., if yourprogram will be more complex• Make enrollment easy and attractive by offeringan incentive to join(free small gift, % off first purchase or # of points)
  46. 46. Sales PromotionsLoyalty/Frequent Buyer ProgramsProgram Structure:Reward the behavior YOU desire, not what thecustomer desires. Set your program to rewarddifferent customers for different spending levels.• Purchases: Reward customers based on thedollar amount of purchase. Spend $250 during July and receive a giftcertificate worth $25 off any purchase in August
  47. 47. Sales PromotionsLoyalty/Frequent Buyer ProgramsProgram Structure:Points: Buyers earn points for every dollar theyspend. You then determine what award theyreceive at each point level.Could give points for every visit to your store.Then for every $100 they spend, they getadditional points, etc.
  48. 48. Sales PromotionsLoyalty/Frequent Buyer Programs
  49. 49. Sales Promotions
  50. 50. Sales PromotionsResourceswww.promo.comwww.pmalink.org Promotion Marketing Assocwww.couponpros.org Assoc of Coupon Professionalswww.isp.org.uk Institute of Sales Promotions (UK)

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