Transcript Chapter 1
Sales Promotion © 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Sales Promotion “A direct inducement that offers an extra value or incentive for the product to the sales force, distributors, or the ultimate consumer with the primary objective of creating an immediate sale.” An extra incentive to buy A tool to speed up sales Targeted to different parties © 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Sales Promotion Vehicles Consumer-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 Loyalty programs programs Event marketing © 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin The San Diego Padres Use a Promotion to Boost Attendance *Click outside of the video screen to advance to the next slide © 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Media Advertising Often Delivers a Promotion Message © 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Reasons for Increase in Sales Promotion Growing power of retailers Reasons Declining brand loyalty Increased promotional sensitivity Brand proliferation Fragmentation of consumer markets Short-term focus of marketers Increased accountability Competition Clutter © 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Consumer Franchise-Building (CFB) Promotions CFB Promotional Objectives Communicate distinctive brand attributes Develop and reinforce brand identity Build long-term brand preference CFB Techniques and Practices “Frequency” “Frequency” programs that programs encourage repeat encourage repeat purchase and purchase loyalty Contests and, “Frequency” sweepstakes that programs increase encourage involvement and patronage loyalty help build equity © 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Premium offers that reinforce the brand image and help build equity Sweepstakes Can Help Build Brand Equity © 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Nonfranchise-Building (non-FB) Promotions Non-FB Promotional Objectives Accelerate the purchase decision process Generate an immediate sales increase Non-FB Promotions . . . Do not identify unique brand features Do not contribute to brand identity or image © 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Nonfranchise-Building (non-FB) Promotions Non-FB Promotions May Include . . . Price-off deals Bonus packs Rebates or refunds Non-FB Promotions Shortcomings Trade promotions benefits may not reach customers If they do, they may lead only to price reductions © 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Customers may “buy price” rather than brand equity Objectives of Consumer-Oriented Sales Promotion To increase consumption of an established brand brand To obtain trial and purchase Objectives Enhance IMC efforts and build brand equity To defend (maintain) current customers To target a specific segment © 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin 50% 25% 0% 75% © 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Other Prepricing on package Contests Internet promotions Sweepstakes Electronic retail promotions Premium offers Money back offers/other refunds Sampling established products Sampling new products Couponing in store Couponing in retailers' ads Cents-off promotions Couponing consumer direct Use of Consumer Promotions by Package Goods Companies 100% Sampling Sampling Works Best When The products are of relatively low unit value, so samples don’t cost much The products are divisible and can be broken into small sizes that can reflect the products features and benefits © 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin The purchase cycle is relatively short so the consumer can purchase in a relatively short time period Sampling Methods Door-to-door Methods Direct mail Central location distribution In-store sampling Cross-product sampling Co-op package distribution With newspaper/magazine Event sampling Internet sites © 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Samples are Often Distributed With Local Newspapers © 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Armor All Uses an On-Package Sample © 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Coupons The oldest and most widely used sales promotion tool Nearly 260 240 billion distributed each year in the US Coupons 80 percent of consumers use coupons and 25% use them regularly © 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Advantages and Limitations of Coupons Advantages Disadvantages Appeal to price sensitive consumer Difficult to determine how many consumers will use coupons and when Can offer price break without retailers coop Coupons are often used by loyal consumers who may purchase anyway Can be effective way to induce trial of new or existing products Declining redemption rates and high costs of couponing Can be way to defend market share and encourage repurchase Misredemption and fraud © 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Percent of Sales Made With Coupons for Various Products 43% Disposable Diapers 35% Ready-to-Eat Cereal 29% Liquid Detergents 25% Deodorants 24% Sanitary Protection 20% Coffee 12% Pet Food 11% Adult Cold Remedies 8% Carbonated Beverages 7% Candy Gum 2% © 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Coupon Distribution Other Magazines In / On Pack Direct Mail Newspaper Coop Newspaper ROP Freestanding Inserts © 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin FSIs are the Most Popular Types of Coupons © 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Coupon Redemption Rates Instant On-Pack Regular On-Pack On-Shelf Distributed In-Pack Cross-Ruff Handout Electronically Dispensed On-Pack Cross-Ruff Instant On-Pack Cross-Ruff Regular In-Pack All Other Out-Store Handouts Health & Beauty Grocery All Other In-Store Handouts Direct Mail Free Standing Inserts Magazine Newspaper 0% 5% 10% 15% 20% © 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin 25% 30% 35% 40% 45% Valpak’s Advertising Helps Enhance the Value of Coupons *Click outside of the video screen to advance to the next slide © 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Coupons Are Now Available Online © 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin 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 Free Premiums: Only require purchase of the product Self-liquidating Premiums: require consumer to pay some or all of the cost of the premium © 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Airline Miles are a Very Popular Premium Incentive © 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Contests and Sweepstakes Contest: a promotion where consumers compete for prizes or money on the basis of skills or ability. Winners are determined by judging entries or ascertaining which entry comes closes to some predetermined criteria Sweepstakes/games: a promotion where winners are determined purely by chance and cannot require a proof of purchase as a condition for entry. Winners are chosen by random selection from a pool of entries or generation of a number to match those held by game entrants. © 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Problems With Contests and Sweepstakes Little consumer franchise building Problems Focus on contest/sweepstakes, not brand Effectiveness Negative publicity Federal regulations Use by professionals or hobbyists © 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Other Popular Consumer Sales Promotion Tools Bonus Packs Refunds and Rebates Other Promotional Tools Event Marketing Price-off Deals Frequency/ Loyalty Programs © 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Event Marketing © 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Summary of Consumer-Oriented Promotions and Market Objectives © 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Trade-Oriented Sales Promotion Objectives Maintain trade support for existing products Obtain distribution of new products Objectives Build retail inventories Encourage retailers to display existing brands © 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Types of Trade-Oriented Promotions Contests and Incentives Trade Allowances Buying Allowances Point-of-Purchase Displays Promotional Allowances Sales Training Programs Trade Shows Cooperative Advertising © 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Slotting Allowances Types of Cooperative Advertising Horizontal Cooperative Advertising IngredientSponsored Coop Advertising Cooperative Advertising Vertical Cooperative Advertising © 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin “Intel Inside”- A Powerful Co-op Program *Click outside of the video screen to advance to the next slide © 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin