capítulo 12 clow y baack

Copyright © 2010 by Pearson Education, Inc. publishing as Prentice Hall

12 Chapter Twelve

Sales Promotions

12-1


Sales Promotions

Hook Fans

Corpus Christi Hooks – Double A

Affiliate of Houston Astros

Attendance – 7,000 per game

Thrives on consumer promotions

30 promotional nights (72 home games)

Discounts and giveaways

Sponsorships and trade promotions

Whataburger Field

“Postgame catch” and “Kids Day”

Fun, family entertainment

12

12-2


Chapter Overview

• Consumer promotions

• Individuals/businesses that use product

• Trade promotions

• Directed to channel members

• Possible erosion of brand equity

• Can differentiate a brand

• Use varies – product life cycle

12 Sales Promotions

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• Coupons

• Premiums

• Contests and sweepstakes

• Refunds and rebates

• Sampling

• Bonus packs

• Price-offs

F I G U R E 1 2 . 1

Types of Consumer Promotions

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Coupons

• 323 billion distributed

• 3 billion redeemed (0.93%)

• Average value was 89 cents

• Savings of $3.47 billion

• Coupon usage

• 78% of households use

• 64% willing to switch brands

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F I G U R E 1 2 . 2

Percentage of Consumers and Coupon Usage

Always

20.7%

Sometimes

37.7%

Rarely

17.0%

Never

24.6%

Source: Karen Holt, “Coupon Crimes,” Promo, Vol. 17, No. 5 (April 2004), pp. 23-29.

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A coupon accompanies this informational Gold Bond advertisement.

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Influencing Brand Purchases

• Sampling 7.78

• Word-of-mouth 7.18

• Coupons 5.91

• Advertising 5.61

• Contests 1.24

On a scale of 1 to 10, the following are the top five influences on

the brand purchased by a consumer.

Source: The Second Annual Survey of Consumer Preferences for Product Sampling, Santella &

Associates (Http://www.santella.com/marketing.htm).

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Percentage of Sales with a Coupon

• Disposable diapers 17.1%

• Detergents 15.0%

• Meal starters 14.2%

• Dough products (refrigerated) 13.6%

• Cereal 13.4%

• Wrapping materials, bags 12.8%

• Oral hygiene products 11.7%

• Household cleaners 11.7%

Product category % of sales using

manufacturer’s coupon

Source: AC Nielson Scantrack, Santella & Associates

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• Print media (90%)

• FSI (88%)

• Direct mail

• On- or in-package

• In-store

• Sampling

• Scanner-delivered

• Cross-ruffing

• Response offer

• Internet

• Fax

• Sales staff

F I G U R E 1 2 . 3

Methods of Distributing Coupons

12-10


Print and FSI Coupons

• Consumers must make conscious effort to

clip coupon

• Creates brand awareness

• Must purchase brand on next trip to retailer

• More likely to recall brand name

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Reasons for using:


Types of Coupons

• Instant redemption

• Bounce-back

• Scanner-delivered

• Cross-ruffing

• Response offer

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Coupon Redemption Rates

• Instant redeemable 39.3%

• Bounce-back 17.2%

• Instant redeemable – cross ruff 17.1%

• Electronic shelf 10.2%

• Electronic checkout 7.8%

• In-pack 5.8%

• On-pack 4.7%

• Direct mail 3.5%

• Handout 3.1%

• Free-standing inserts 1.3%

Type of coupon Percent Redeemed

Source: Santella & Associates

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Problems with Coupons

• Reduced revenues • Used by brand preference consumers (80%)

• “Necessary evil”

• $500 million illegally redeemed • Mass cutting

• Counterfeiting

• Misredemption

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Types of Premiums

• Free-in-the-mail

• In- or on-package

• Store or manufacturer

• Self-liquidating

12-15

http://www.fisherboy.com/


Premium Offer

Click picture for video.

An ad by Haik

Humble Eye Center

offering a premium

with the purchase of

custom pair of eye

glasses.

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• Match the premium to the target market

• Carefully select the premiums • Avoid fads, try for exclusivity

• Pick premium that reinforces firm’s product and image

• Integrate the premium with other IMC tools • especially advertising and POP displays

• Don’t expect premiums to increase short-term profits

Source: Based on Don Jagoda, “The Seven Habits of Highly Successful Premiums,” Incentive, (August

1999), Vol. 173, Issue 8, pp. 104-105.

F I G U R E 1 0 . 4

Keys to Successful Premiums

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Fast-food chains are

well known for their

in-store premiums.

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Contests and Sweepstakes

• Contests – require activity, skill

• Can require purchase to enter • Some states illegal

• Sweepstakes – random chance

• Must publish odds of winning

• Cannot require purchase

• Rewards

• Extrinsic

• Intrinsic

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• Rewards

• Extrinsic • Choosing the right prizes

• Intrinsic • Choosing the right contests and sweepstakes

• Alternative locations

• Internet

• Mobile phone

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Goals

• Coordinate with other marketing

• Encourage customer traffic • Boost sales - questionable

• Intrinsic rewards draws customers back

• Increase in brand awareness

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Refunds and Rebates

• Refunds – soft goods

• Rebates – hard goods

• Hassle to redeem

• Now expected by consumers

• Redemption rates

• 30% overall

• 65% for rebates over $50

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• In-store distribution

• Direct sampling

• Response sampling

• Cross-ruff sampling

• Media sampling

• Professional sampling

• Selective sampling

F I G U R E 1 2 . 6

Types of Sampling

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Benefits of Sampling

• Introduce new products

• Generate interest

• Generate leads

• Collect information

• Internet sampling

• Boost sales

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Experiment

Impact of In-Store Sampling

• Meat product A 100% 430% 110%

• Meat product B 100% 590% 123%

• Meat product C 100% 185% 100%

• Bread product 100% 170% 90%

• Biscuit product A 100% 359% 64%

• Biscuit product B 100% 201% 49%

Product Previous 4 weeks Sampling Week Following 4 weeks

Source: Michelle Lawson, Dalton McGuinness and Don Esslemont, “The Effect of In-Store Sampling on the

Sale of Food Products,” Marketing Bulletin, 1990, Vol. 1, pp 1-6.

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Experiment

Impact of In-Store Sampling on Competitors

• Bread product 100% 170% 90%

• Competitor A 100% 106% 105%

• Competitor B 100% 79% 93%

• Competitor C 100% 78% 86%

Product Previous 4 week Sampling week Following 4 weeks

Source: Michelle Lawson, Dalton McGuinness and Don Esslemont, “The Effect of In-

Store Sampling on the Sale of Food Products,” Marketing Bulletin, 1990, Vol. 1, pp 1-6.

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Sampling Programs

• Problems

• Cost

• Distribution

• Effective sampling

• Component of IMC plan

• Stimulate trial usage

• Target audience of sample

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• Increase usage of a product

• Match or preempt competition

• Stockpile the product

• Develop customer loyalty

• Attract new users

• Encourage brand switching

F I G U R E 1 2 . 7

Reasons for Using Bonus Packs

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Problems with Bonus Packs

• Rarely attract new customers

• Some consumers skeptical

• Small bonus – price not changed

• Large bonus – price increased first

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Price-Offs

• Temporary price reduction

• Stimulating sales

• Reduces financial risk

• Brand switching

• Stockpiling

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Price-Offs

• Proven to be successful

• Appeal of monetary savings

• Reward is immediate

• Problems • Can have a negative impact on profit

• Encourages consumers to become more

price-sensitive

• Potential image on brand image

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Impact of Price-off on

Consumer Purchase

Source: “Studies Indicate Coupons are an Effective Promotional Tool,” Santella &

Associates (http://www.santella.com/coupon.htm)

Consumer unaware item was on sale.

51%

Consumer purchased because of sale price

9%

Consumer would have purchased item anyway

40%

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http://www.santella.com/coupon.htm


Promotion Combinations

• Overlay

• Intra-company tie-in

• Inter-company tie-in

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Planning Consumer Promotions

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Promotion Prone

Brand Loyal

Price Sensitive


Retail Incentives Consumer Promotions

• Increase store traffic

• Increase store sales

• Attract new customers

• Increase the basket size

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Trade Promotions

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• Account for 70% of marketing budget

• Often 2nd largest expense

• Account for 17.4% of gross sales

Trade

Promotions

Trade Allowances

Trade Incentives

Trade Contests

Trade Shows


• Off-invoice allowance • Price discount

• 35% of all trade dollars

• Slotting fees

• Exit fees

F I G U R E 12 . 10

Trade Allowances

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Slotting Fees • Retailer justification

• Cost to add new products to inventory

• Requires shelf space

• Simplifies decision about new products

• Adds to bottom line

• Manufacturer objections

• Form of extortion

• Divert money from advertising and marketing

• Detrimental to small manufacturers

Copyright © 2010 by Pearson Education, Inc. publishing as Prentice Hall 12-38


Trade Allowance Complications

• Failure to pass allowances on to retail customers • Only occurs 52% of the time

• Retailers like only one brand on-deal at a time

• Retailers can schedule and promote on-deal brands

• Forward buying • Pass savings on or pocket higher margin

• Additional carrying costs

• Diversion • Pass savings on or pocket higher margin

• Additional shipping costs

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Trade Contests

• Used to achieve sales targets

• Funds known as “spiff money”

• Rewards can be prizes or cash

• Can be designed for various channel members

• Some organizations do not allow trade contests because of possible conflict of interests

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F I G U R E 12 . 11

Trade Incentives

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• Cooperative merchandising

agreement

• Premium or bonus pack

• Co-op advertising programs

Trade

Incentive


Cooperative Merchandising

Agreement

• Formal agreement

• Popular with manufacturers

• Retailer must perform marketing functions

• Manufacturer maintains control

• Longer-term commitments

• Benefit retailers

• Schedule calendar promotions

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Cooperative Advertising

• Manufacturer pays part of retailer’s ad costs

• Retailer must follow specific guidelines

• No competing brands

• Retailers accrue monies

• Amount is based on sales

• Allows retailers to expand advertising

• Manufacturers gain exposure in local markets

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Trade Shows

• Manufacturers (sellers) • Display merchandise

• Seek prospects

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• Retailers (buyers) • Compare merchandise

• Seek vendors


• Education seekers

• Reinforcement seekers

• Solution seekers

• Buying teams

• Power buyers

Source: English, “On Displays,” Business First - Western New York, (Nov. 29, 1999), Vol. 16, No. 31, pp. 31-32.

F I G U R E 12 . 12

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Categories of Buyers at Trade Shows


Trade Shows • Few deals finalized at trade show

• International attendees want to make deals

• Increase in international trade shows

• National shows being replaced by regional and niche shows

• Niche shows • Provide better prospects

• Lower costs

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Concerns Trade Promotions

• Corporate reward structure

• Used for short-term sales goals

• Tend to be used outside of IMC Plan

• Costs

• Over-reliance to push merchandise

• Difficult to reduce – competitive pressures

• Potential erosion of brand image

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