Lecture 10-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. 495-496 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 p. 503 of the text. Summary Overview This slide summarizes the various nonfranchise-building techniques available to marketers and the shortcomings of using non-FB promotions. These include: Price-off deals Bonus packs Rebates/refunds The shortcomings of non-FB promotions are: Trade promotion benefits may not reach customers If they do, they may lead only to price reductions Customers may “buy price” rather than brand equity Use of this slide This slide can be used to discuss the concept of nonfranchise-building promotions, show some examples of them, and review the shortcomings of using these techniques. Short-term non-FB promotions have their place in a firm’s promotional mix, particularly when competitive developments call for them. But their limitations must be recognized when a long-term, brand building strategy for a brand is needed.
  • 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.
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  • Relation to text This slide relates to the material on pp. 512-515, which discusses coupon distribution methods. Summary Overview This slide shows a Free Standing Insert type of coupon used by Chicken of the Sea to promote various seafood products. FSIs are the most popular method for delivering coupons to consumers as they are usually delivered through inserts in the Sunday paper in most areas. Use of this slide This slide can be used to show an example of a FSI coupon and to engage students in a discussion of coupon distribution methods. Nearly 87% of all coupons are distributed through FSIs. However, this all creates a problem because of the high level of clutter. Most consumers ignore the FSI inserts or do not take the time to go through them thoroughly. However, consumers who are prone to using coupons will go through the FSIs carefully and clip coupons of brands that they use or might be interested in trying.
  • 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. 521-524 of the text. Summary Overview This slide shows other types of popular consumer sales promotion tools. Some of these tools include: Refunds and rebates – manufacturer returns a portion of the purchase price usually after a proof of purchase Bonus packs – extra amount of product at the regular price by providing a larger container Price off deals – price reduction offered on the package Frequency/loyalty programs – companies offer the consumer an accumulation of points for the continuation of their purchases Event marketing – promotion where a company is linked to an event or when a themed activity is developed for the purpose of creating experiences for consumers and promoting a product or service Use of this slide This slide can be used to discuss the numerous other consumer sales promotion tools available to marketers. Many of these are growing in popularity particularly frequency/loyalty programs and event marketing. Frequency/loyalty programs are popular as marketers view this tool as a way to retain customers by encouraging them to use their products on a continual basis. Event marketing has become popular as marketers develop IMC programs that create experiences for consumers in an effort to associate their brands with certain lifestyles and activities.
  • 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 .
  • 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.
  • Lecture 10-sales promotion

    1. 1. Sales Promotion Dr. George BelchSan Diego State University
    2. 2. Sales Promotion“A direct inducement that offers an extravalue or incentive for the product to the salesforce, distributors, or the ultimate consumerwith the primary objective of creating animmediate sale.” An extra A tool toincentive to buy speed up sales Targeted to different parties
    3. 3. Sales Promotion VehiclesConsumer-Oriented Trade-Oriented Samples Contests, dealer incentives Coupons Trade allowances Premiums Point-of-purchase displays Contests/sweepstakes Training programs Refunds/rebates Trade shows Bonus packs Packs Cooperative advertising Price-off deals Frequency programs Loyalty programs Event marketing
    4. 4. Reasons for Increase in Sales Promotion Growing power of retailersReasons Declining brand loyalty Increased promotional sensitivity Brand proliferation Fragmentation of consumer markets Short-term focus of marketers Increased accountability Competition Clutter
    5. 5. Consumer Franchise-Building (CFB) Promotions CFB Promotional Objectives Communicate Develop and Build long-termdistinctive brand reinforce brand brand preference attributes identity CFB Techniques and Practices “Frequency” Contests and, “Frequency” “Frequency” Premium offers programs that sweepstakes that programs programs that reinforce theencourage repeat increaseencourage repeat encourage brand image and purchase and involvement and purchase patronage loyalty help build equity loyalty help build equity ©
    6. 6. Nonfranchise-Building (non-FB) Promotions Non-FB Promotional Objectives Accelerate the Generate anpurchase decision immediate sales process increase Non-FB Promotions . . . Do not identify Do not contribute to unique brand brand identity or features image
    7. 7. Nonfranchise-Building (non-FB) Promotions Non-FB Promotions May Include . . . Rebates orPrice-off deals Bonus packs refunds Non-FB Promotions ShortcomingsTrade promotions If they do, they Customers maybenefits may not may lead only to “buy price” ratherreach customers price reductions than brand equity
    8. 8. Objectives of Consumer-Oriented Sales Promotion To increase To increase consumption of consumption of an established an established brand brand To defendTo obtain trial (maintain)and purchase current Objectives customers Enhance IMC To target a efforts and build specific segment brand equity
    9. 9. Sampling Sampling Works Best When The purchase The products are cycle is The products divisible and can relatively shortare of relatively be broken into so the low unit value, small sizes that consumer can so samples can reflect the purchase in adon’t cost much products features relatively short and benefits time period
    10. 10. Sampling Methods Door-to-doorMethods Direct mail Central location distribution In-store sampling Cross-product sampling Co-op package distribution With newspaper/magazine Event sampling Internet sites
    11. 11. Coupons The Nearly oldest and 260 billion 240 most widely used distributed eachsales promotion tool year in the US Coupons 80 percent of consumers use coupons and 25% use them regularly © 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
    12. 12. FSIs are the Most Popular Types of Coupons
    13. 13. Premiums Premium: an offer of an item of merchandise or service either free or at a low cost that is an extra incentive for customers Two Types of Premiums Self-liquidatingFree Premiums: Premiums: requireOnly require purchase consumer to pay someof the product or all of the cost of the premium
    14. 14. Contests and SweepstakesContest: a promotion where consumers compete forprizes or money on the basis of skills or ability. Winnersare determined by judging entries or ascertaining whichentry comes closes to some predetermined criteriaSweepstakes/games: a promotion where winners aredetermined purely by chance and cannot require a proofof purchase as a condition for entry. Winners are chosenby random selection from a pool of entries or generationof a number to match those held by game entrants.
    15. 15. Other Popular Consumer Sales Promotion Tools Bonus PacksRefunds and Other Price-off Deals Rebates Promotional Tools Frequency/ Event Loyalty Marketing Programs
    16. 16. Trade-Oriented Sales Promotion Objectives Maintain tradeObtain distribution of support for existing new products products Objectives Encourage retailers Build retail inventories to display existing brands
    17. 17. Types of Trade-Oriented Promotions Contests and Incentives Buying Trade Allowances Allowances Point-of-Purchase Promotional Displays Allowances Sales Training Programs Slotting Allowances Trade Shows Cooperative Advertising
    18. 18. Types of Cooperative Advertising Horizontal Ingredient- Cooperative Sponsored Advertising Coop Advertising Cooperative Advertising Vertical Cooperative Advertising ©
    19. 19. Promotion Agencies’ Shifting Role Traditional New and Improved Created tactics Creates strategy Do single project Continuing service Hired for specialty One full-service firmSingle agency contact Agency team contactInferior to ad agency Equal to ad agencyIndirect accountability Directly accountable ©
    20. 20. The Sales Promotion Trap 1 2 3 4