Transcript Lecture 11

Sales Promotion
Chapter Eleven
Key Learning Points
How sales promotion differs from other
modes of communication
The different types of sales promotions
Differences between customer, trade,
and retailer-oriented promotions
Issues in the development of
promotional strategy and objectivesetting
Allocating money between advertising
and sales promotion
Copyright ©2011 Pearson Education, Inc., Publishing as Prentice Hall
11-2
Table 11.1
Automobile Company Average Sales
Incentives in 2009
Visit Edmunds.com
Copyright ©2011 Pearson Education, Inc., Publishing as Prentice Hall
11-3
“Sales promotion is an
action-focused marketing
event whose purpose is to
have a direct impact on the
behavior of the firm’s
customers.”
- Robert C. Blattberg
& Scott A. Neslin
Copyright ©2011 Pearson Education, Inc., Publishing as Prentice Hall
11-4
Figure 11.1
Simplified Channel and Promotional
Structure
Copyright ©2011 Pearson Education, Inc., Publishing as Prentice Hall
11-5
Table 11.2, Part A
Types of Consumer Promotions
Copyright ©2011 Pearson Education, Inc., Publishing as Prentice Hall
11-6
Sales Promotion
Price-oriented promotions
Couponing is the dominant form of
activity.
Redemption is low.
Table 11.4
Where Coupons are Distributed
Copyright ©2011 Pearson Education, Inc., Publishing as Prentice Hall
11-8
Marketing Research
Methods of Coupon Distribution
Free-standing inserts
ROP newspaper
Sunday supplements
Magazine
Direct mail
Copyright ©2011 Pearson Education, Inc., Publishing as Prentice Hall
On-package
Instantly redeemable
In-package
Cross-ruff
Retailer coupons
Coupon machines
11-9
Table 11.5
Couponing Objectives
Copyright ©2011 Pearson Education, Inc., Publishing as Prentice Hall
11-10
Discussion
E-coupons are gaining in popularity.
Visit one of the web sites below to
learn more.
www.thecouponclippers.com
www.coolsavings.com
www.coupondispatch.com
What advantages do e-coupons offer
compared to traditional coupons?
Sales Promotions
Types of price-oriented promotions:
Coupons
Price, value, or bonus packs
Refunds, rebates and money-back offers
Interest rate promotions
In-store discounts
Price-oriented promotions can have
negative effects on consumer behavior.
Sales Promotions
Product-oriented promotions give
away either the product itself or a
closely related product.
Sampling is commonly used for new
products.
Figure 11.3
The FreeSite.com
Copyright ©2011 Pearson Education, Inc., Publishing as Prentice Hall
11-14
Sales Promotion
Product-oriented promotions
Premiums: Free merchandise provided
with purchase or with fee and proofs
of purchase
Sales Promotions
Special event promotions:
Contests and sweepstakes
Tie-ins to sporting events and movies
Table 11.2, Part B
Types of Trade Promotions
Copyright ©2011 Pearson Education, Inc., Publishing as Prentice Hall
11-17
Sales Promotions
Price-Based Trade Promotions
Provide retailers with an incentive to
carry the product.
Often used when manufacturers want
retailers to pass on savings to buyers.
Instead, many companies engage in
forward buying practices.
Copyright ©2011 Pearson Education, Inc., Publishing as Prentice Hall
11-18
Table 11.2, Part C
Types of Retailer Promotions
Copyright ©2011 Pearson Education, Inc., Publishing as Prentice Hall
11-19
Promotion Strategy,
Objectives and Evaluation
Consumer-oriented promotions:
Strategic issues
Effect on new products
Effect on existing brands
Promotional dilemma
Cost and benefits must be
considered
Table 11.6
Consumer Promotion Objectives
Copyright ©2011 Pearson Education, Inc., Publishing as Prentice Hall
11-21
Figure 11.4
Evaluating Sales Promotions:
Tracking Studies
Copyright ©2011 Pearson Education, Inc., Publishing as Prentice Hall
11-22
Promotion Strategy,
Objectives and Evaluation
Incremental Effects of
Price Promotions
Accelerated regular purchases
Accelerated captured purchases
Unaccelerated regular purchases
Unaccelerated captured purchases
Copyright ©2011 Pearson Education, Inc., Publishing as Prentice Hall
11-23
Figure 11.5
Strategies for Trade Dealing
Copyright ©2011 Pearson Education, Inc., Publishing as Prentice Hall
11-24
Table 11.7
Objectives of Trade Deals
Copyright ©2011 Pearson Education, Inc., Publishing as Prentice Hall
11-25
Table 11.8
Sales Promotion Plan
Copyright ©2011 Pearson Education, Inc., Publishing as Prentice Hall
11-26
Illustration
Proctor & Gamble created the following
sales promotion plan for a new consumer
goods product.
Trade allowances
Sampling
Couponing
Special promotions
Refunds
Premiums
Sweepstakes and contests
Copyright ©2011 Pearson Education, Inc., Publishing as Prentice Hall
11-27
Promotion Strategy,
Objectives & Evaluation
Evaluating trade promotions
Evaluation typically uses tracking of beforeand-after results.
The frequency with which deals are passedthrough should also be considered.
Copyright ©2011 Pearson Education, Inc., Publishing as Prentice Hall
11-28
Table 11.9
Sales Effect of Deal Discount, Feature
Advertising, and Displays
Copyright ©2011 Pearson Education, Inc., Publishing as Prentice Hall
11-29
Activity
Suppose that you were the
marketing manager responsible for
introducing a new brand of snack
food. Describe the types of
consumer and trade sales
promotions that you would use to
introduce the product.
Promotion Budgeting
Budgeting follows the same
approaches discussed for setting ad
objectives.
Select method of budgeting.
Determine overall advertising and
promotion budget.
Determine amount to be spent on
promotion.
Copyright ©2011 Pearson Education, Inc., Publishing as Prentice Hall
11-31
Sales Promotions
Conditions Affecting Total Budget
for Advertising and Promotions
Standardized product
Many end-users
Small purchase
amount
Channel members
make sales
Copyright ©2011 Pearson Education, Inc., Publishing as Prentice Hall
Premium-priced
product
High contribution
margin
Small market share
11-32
Promotion Budgeting
Several factors influence the
allocation of money between
advertising and promotion.
The total amount of resources
Customer factors
Copyright ©2011 Pearson Education, Inc., Publishing as Prentice Hall
11-33
Promotion Budgeting
Consumer Franchise Building
CFB ratio =
CFB $
(CFB$ + non-CFB$)
* CFB activities are those that build brand equity.
* Non-CFB activities focus on price alone.
Copyright ©2011 Pearson Education, Inc., Publishing as Prentice Hall
11-34
Sales Promotion and
Information Technology
In-store information technology
Illustration
The marketing manager for the
number two brand of peanut butter
could take several steps to increase
market share.
Users of #1 brand receive high value
coupon.
Redeemed coupons of #1 brand
generate repeat purchase coupon.
Complimentary purchases generate
medium value coupon.
Checkout Direct program is
implemented.
Copyright ©2011 Pearson Education, Inc., Publishing as Prentice Hall
11-36
Discussion Questions
Sales promotions can be used in the marketing of
services and not-for-profit organizations as well as in
consumer goods marketing.
While some charitable organizations sell merchandise,
most use marketing to solicit donations or volunteers.
1. Which promotion techniques are most appropriate
for charities that do not sell merchandise?
2. Given that most charities operate with very limited
budgets, which techniques could realistically be
used by those that do sell merchandise?
Copyright ©2011 Pearson Education, Inc., Publishing as Prentice Hall
11-37
Executive Summary
Sales promotion is short-term oriented.
Three kinds of promotions exist.
Customer promotions are often pricerelated.
Trade promotions provide incentives to
channel members.
Retailer promotions involve both price
and special displays.
Evaluating sales promotions is important.
Promotions are being run on the Web.
Copyright ©2011 Pearson Education, Inc., Publishing as Prentice Hall
11-38