Promotions

Learning Targets1. Explain the characteristics of sales

promotion and personal selling

Vocabulary

Sales promotionTrade promotion1. Slotting allowance2. Buying allowance3. Tradeshow/Conventions4. Sales incentives

Sales Promotion

Marketing activities that are used to stimulate consumer purchasing and sales effectiveness.

Objectives (Why?) of Sales Promotion:a. Increase Salesb. Inform Customersc. Create positive store or corporate image.

Unique Characteristics

Short term Activities Some type of incentive to make a

purchase Successfully used in all channels of

distribution with manufacturers, wholesalers, retailers, and consumers

Consumer oriented or trade (business-to-business) oriented. More money is spent on promoting to

business than to consumers!1. Seminars2. Buy a certain quantity get a lower price

Buy 1

Get 1FREE

Trade Promotions Sales promotion activities designed to

gain manufacturers’, wholesalers’, and retailers’ support for a product.a. Slotting Allowancesb. Buying Allowancesc. Trade Shows and Conventionsd. Sales Incentives

1. Slotting Allowance

Cash premium paid by the manufacturer (Post Cereal) to a retail chain (Jewel) for the costs involved in placing a new product on its shelves. $2000-$250,000 per

product The fee varies greatly

depending on the product, manufacturer, and market conditions.

1. Slotting Allowance

In addition to slotting fees, retailers may also charge promotional, advertising and stocking fees.

According to an FTC study, the practice is "widespread" in the supermarket industry.

Many grocers (Jewel) earn more profit from agreeing to carry a manufacturer's product than they do from actually selling the product to retail consumers.

2. Buying Allowances

Special price discount given by manufacturers (Procter and Gamble) to wholesalers (Sam’s club) and retailers (Jewel) to encourage them to either buy a product or buy a larger quantity of a product. Wholesales and retailers make more

money on each product they sell Thus they are more likely to promote the

product to customers.

3. Trade Show and Conventions

Designed to reach wholesalers (Costco) and retailers (Toys R Us). Provide businesses with

opportunities to introduce new products.

Encourage increased sales of existing products

Gain continued company and product support

4. Incentives

Higher-priced products earned and given through contests or as sweepstakes awards for selling a certain quantity of the product.

4. Sales Incentives Awards given to managers and

employees who successfully meet or exceed their company’s set sales quota for a particular product or line of products. Cash, prizes, trips

John Deere Farm Implement dealer might receive an all expense paid trip for selling a certain number of tractors in a given sales year.

Companies work together to make a purchase order from a wholesale company so they can buy in bulk and save money.

A. Slotting allowanceB. Buying allowanceC. Tradeshow/ConventionsD. Sales incentives

Land O Frost pays Walmart $1000 to place their new Premium Mini’s alongside the Oscar Mayer Lunchables and price Land O Frost lower.

A. Slotting allowanceB. Buying allowanceC. Tradeshow/ConventionsD. Sales incentives

The Cary-Grove Chamber of Commerce holds a Community Showcase at Cary-Grove High School. This is an example of:

A. Slotting allowanceB. Buying allowanceC. Tradeshow/ConventionsD. Sales incentives

Katie Dickow receives a plaque with her name on it because she sold the most discount cards in 2012.

A. Slotting allowanceB. Buying allowanceC. Tradeshow/ConventionsD. Sales incentives

Create a Sales Incentive Program1. How many discount cards should each salesperson sell

before receiving a free discount card?2. How many discount cards should each salesperson sell

before receiving 5 extra credit points?3. How many discount cards should each salesperson sell

before receiving 10 extra credit points?4. How many discount cards should the company sell

before getting a big reward (movie day, no test, etc.)

Promotions

Objectives Explain the characteristics of sales

promotion and personal selling Describe the concept of promotional

mix

Vocabulary

1. Sales promotion2. Slotting allowance3. Sales incentives4. Licensing5. Promotional tie-ins6. Premiums7. Incentives8. Promotional mix

Consumer Sales Promotions Designed to encourage

customers to buy a product. Examples:

a. Licensing

b. Promotional Tie-ins

c. Visual Merchandising and Displays

d. Premiums and Incentives

e. Product Samples

a. Licensing Organizations, such as manufacturers, movie

makers, sports teams, and celebrities, may license for a fee their logo, trademark, trade characters, names and likenesses, or personal endorsements to a business to be used in promoting the businesses products.

Examples: NFL, NBA, and NHL (apparel and equipment

manufacturers) use logos and individual sport figure endorsements. Warner Brothers’ movie studio licenses Looney

Tunes cartoon characters to be used to promote Nabisco, McDonald’s and Welch’s products.

Penny Road

Celebrity Endorsement Earnings

Paris Hilton - makes more than $10 million a year from selling 17 different product lines – everything from handbags and sunglasses to pet supplies.

Beyonce - $35 million

Maria Sharapova - $24.2 million (Nike)

b. Promotional Tie-ins Sales promotional arrangements between one or more

retailers or manufacturers. Combine resources (advertising and sales

promotional activities) to do a promotion that creates additional sales for each participant. Complex Several Companies

Doritos and Taco Bell McDonalds and Monopoly

Prizes and Savings Promoted by USAir, Sheraton Universal Hotel, Twin Towers

Hotel, Hertz, and Toys “R” Us.

c. Visual Merchandising and Displays

Coordination of all physical elements in a place of business so that it projects the right image to its customers. Displays (visual and artistic aspects)

Window, floor, counter, and other in-store display techniques

Stimulates sales and serve as in-store advertising.

d. Premiums Designed to increase sales by building

product loyalty and attracting new customers.

Premiums-Low-cost items given away “FREE” to consumers as a condition of purchase.1. Coupons

New Products, enhance sales of current products, and entice retailers to stock and display products.

Factory packs or in-packs are free gifts placed in product packages. Cereal manufacturers

d. Premiums

Traffic builders Low cost premiums such as pens, key

chains, and calendars, which are given away.

Coupon plans Ongoing programs offering a variety of

premiums in exchange for labels, coupons, or other tokens from one or more purchases. Soup can labels – recipe book Proof of purchase combined with money to

purchase a gift

Costs of Premiums

Paid by Businesses offering Premium Coupons – stores send them to

company headquarters or to a clearinghouse to be sorted and passed along to redemption centers. Redemption Centers reimburse stores

for the face value of coupon plus a handling charge of about 8 cents per coupon. Redemption Centers bill Manufacturer.

The First Coupon

C.W. Post introduced the first coupon in 1895. 1 cent token to convince people in Battle

Creek, Michigan to buy Grape-Nuts cereal.

e. Product Samples A free trial size of a product that is sent

through the mail, distributed door-to-door, or through retail stores and trade shows. Detergents, toothpastes, shampoos, deodorants,

and colognes Drug manufacturers give samples to doctors and

dentists to try with their patients Teachers receive sample textbooks to encourage

them to buy classroom sets.

You are walking through the grocery store and a store employee offers you a free sample of a new juice. This is an example of:

A. Licensing

B. Promotional Tie-ins

C. Visual Merchandising

and Displays

D. Premiums and

Incentives

E. Product Samples

You are walking through the grocery store and a store employee offers you a free sample of a new juice. This is an example of:

A. Licensing

B. Promotional Tie-ins

C. Visual Merchandising

and Displays

D. Premiums and

Incentives

E. Product Samples

Consumer Sales Promotions Advantages

Premiums, incentives and product samples Gives customer something

of value and thereby helps maintain product loyalty. Results in more buying Contests and Sweepstakes -

Customers have fun in the (buying) process

Consumer Sales Promotions Disadvantages

Difficult to end without the customers becoming dissatisfied (or at least disappointed that the promotion is finished). If not properly planned and managed,

store image and sales can suffer.

Designed to supplement other promotional efforts and cannot make up for poor products.

Personal Selling Making an oral sales presentation to

one or more potential buyers. Order taking-cashiers, counter clerks,

sales associates. Order getting-professional sales people-

involved in informing customers and helping them to buy. Big ticket items-real estate, automobiles,

home appliances, and industrial goods and services.

Personal Selling-Advantages

Designed to complete a sale once a customer is attracted to a business by advertising, publicity, or sales promotion. Improves customer satisfaction

Addresses customers unique concerns Flexible and individualized

Personal Selling-Disadvantages Salesperson can only help one person at a

time. Larger sales staff is needed

Employees must completely understand the selling process to ensure continued sales and goodwill. Training

Costs of personal selling is higher than costs of self-service selling (no salesperson)

Sales Promotion - Event Marketing

Businesses which sponsor sporting and community events Great future in U.S.

Consumers love events, businesses love consumers.

$2.4 million is spent annually by corporations to sponsor events

World Cup Soccer $20 million for “official sponsorship

MasterCard, General Motors, Coca-Cola, McDonalds

$7 million for “marketing partners” American Airlines, Sheraton, Sprint

Viewed by 30 billion viewers worldwide

Summer or Winter Olympics Viewed by 64% of

American Families 94% of Olympic

viewers believe that the sponsors are successful companies

More than 80% feel that the sponsors are dedicated to excellence and are energetic industry leaders

Sponsorship of Sporting Events

National or Regional Sporting Events NFL Games College Football Games Auto Racing Rodeos Golf Tournaments

Questions

1. Why do Companies choose to sponsor sporting and community Events?Large Viewership means the company name and image will be presented in a favorable light. Companies hope viewers will be influenced to buy.

2. What corporate image is projected to viewers by being a corporate sponsor?Image is that of a successful, vital, energetic company; and industry leader.

Promotional Mix

A combination of different types of promotion. Choose the most effective to persuade

customers or other businesses to purchase and support your products/services. Walt Disney-Local and national advertising,

publicity, sales promotions, and personal selling Courteous, well-groomed employees.

Promotional Mix Advertising – creates awareness Publicity – creates favorable image Sales Promotion – stimulates sales,

reinforce advertising, and support selling efforts.

Personal Selling – builds on all of the previous efforts by helping the individual customer and completing the sale.

Promotional Mix Coordination Decorations and in-store displays should be

coordinated to back up the promotion. Toys being distributed at Burger King should

come out when the new movie comes out Sales personnel should be aware of

coupons, rebates, contests, and other promotional tools that will be used. Sales are lost and customer dissatisfaction

created when products mentioned in ads are not available or the sales staff is uninformed about the promotion.

Marketing Department Promotion budget

Allocate resources Coordinates campaign Determines the right promotional mix for the

company.

Managers Advertising Personal Selling Sales Promotion Publicity

Questions

1. Why do businesses use sales promotions?

2. What is meant by promotional mix?