sales promotion

Copyright 2009 McGraw-Hill Australia Pty Ltd PowerPoint Slides t/a Advertising and Promotion by Belch Slides prepared by Bronwyn Higgs, Victoria University, Australia

Sales Promotion

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Boony Doll a ‘boonanza’ for sales promotion

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An extra incentive to buy

An extra incentive to buy

A tool to speed up sales

A tool to speed up sales

Targeted to different parties

Targeted to different parties

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.

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.

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SamplesSamples

CouponsCoupons

PremiumsPremiums

Contests/sweepstakesContests/sweepstakes

Refunds/rebatesRefunds/rebates

Bonus packsBonus packs

Price-off dealsPrice-off deals

Loyalty programsLoyalty programsCooperative advertisingCooperative advertising

Trade allowancesTrade allowances

Training programsTraining programs

Contests, dealer incentivesContests, dealer incentives

Point-of-purchase displaysPoint-of-purchase displays

Trade showsTrade shows

Sales promotion vehiclesCConsumer-orientedonsumer-oriented Trade-orientedTrade-oriented

Event marketingEvent marketing

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Growing power of retailersGrowing power of retailers

Declining brand loyaltyDeclining brand loyalty

Increased promotional sensitivityIncreased promotional sensitivity

Brand proliferationBrand proliferation

Fragmentation of consumer marketsFragmentation of consumer markets

Short-term focus of marketersShort-term focus of marketers

Increased accountabilityIncreased accountability

ClutterClutter

Explanations for increase in sales promotion

Some reasonsSome

reasons

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The shifting role of the sales promotion agency

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Target a specific market segmentTarget a specific market segment

Obtain trial and repurchaseObtain trial and repurchase

Increase consumption Increase consumption

Defend current customers Defend current customers

Enhance IMC and build brand equityEnhance IMC and build brand equity

Consumer-oriented sales promotion

Identify target audiencesIdentify target audiences

Determine sales promotion objectivesDetermine sales promotion objectives

Set measurable goalsSet measurable goals

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Myer gift with purchase

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Types of consumer promotions used by packaged goods manufacturers

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The products are of relatively low unit value, so

samples do not cost much

The products are of 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

product’s features and benefits

The products are divisible and can be broken into small sizes that can reflect the

product’s features and benefits

The purchase cycle is relatively

short so the consumer can purchase in a relatively short

time period

The purchase cycle is relatively

short so the consumer can purchase in a relatively short

time period

Sampling

Sampling works best whenSampling works best when

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Bertoli’s ‘Taste of Tuscany’

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Door-to-doorDoor-to-door

Direct mailDirect mail

In-store samplingIn-store sampling

On-package samplingOn-package sampling

Event samplingEvent sampling

With magazine/newspaper With magazine/newspaper

OtherOther

Sampling distribution

MethodsMethods

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Bundle of baby products

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Coupons

CouponsCoupons

Used by virtually

all packaged goods manufacturers

The oldest and

most widely used sales promotion tool

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Advantages and limitations of coupons

AdvantagesAdvantages DisadvantagesDisadvantages

Appeal to price-sensitive consumer

Appeal to price-sensitive consumer

Can offer price break without retailer’s cooperation

Can offer price break without retailer’s cooperation

Can be effective way to induce trial of new or existing

products

Can be effective way to induce trial of new or existing

products

Can be way to defend market share and encourage

repurchase

Can be way to defend market share and encourage

repurchase

Coupons are often used by loyal consumers who may

purchase anyway

Coupons are often used by loyal consumers who may

purchase anyway

Misredemption and fraudMisredemption and fraud

Difficult to determine how many consumers will use

coupons and when

Difficult to determine how many consumers will use

coupons and when

Declining redemption rates and high costs of couponing

Declining redemption rates and high costs of couponing

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OtherMagazinesIn/on packDirect mailNewspaper coop.Shop-a-docketFreestanding inserts

Coupon distribution

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Shop-a-docket: an Australian innovation

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Free premiums: Only require purchase of the product

Free premiums: Only require purchase of the product

Self-liquidating premiums: require consumer to pay some or all of the cost of the premium

Self-liquidating premiums: require consumer to pay some or all of the cost of the premium

Premiums

Two types of premiumsTwo types of 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

Premium: an offer of an item of merchandise or service either free or at a low cost that is an extra incentive for customers

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McDonald’s Happy Meals

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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 closest to some predetermined criteria.

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 closest 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.

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.

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Do not contribute to brand buildingDo not contribute to brand building

Focus not on brandFocus not on brand

EffectivenessEffectiveness

Negative publicityNegative publicity

Federal regulationsFederal regulations

Use by professionals or hobbyistsUse by professionals or hobbyists

EffectivenessEffectiveness

Legal considerationsLegal considerations

May generate negative publicityMay generate negative publicity

Problems with contests and sweepstakes

ProblemsProblems

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Bonus packsBonus packs

Frequency/loyalty

programs

Frequency/loyalty

programsEvent marketingEvent marketing

Price-off dealsPrice-off dealsRefunds and rebates

Refunds and rebates

Other popular consumer sales promotion tools

Otherpromotional

tools

Otherpromotional

tools

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A bonus for consumers

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Loyalty programs

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Summary of consumer-oriented promotions and market objectives

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Encourage retailers to display

existing brands

Encourage retailers to display

existing brands

Obtain distribution of new products

Obtain distribution of new products

Maintain trade support for existing products

Maintain trade support for existing products

Build retail inventoriesBuild retail inventories

Trade-oriented sales promotion objectives

ObjectivesObjectives

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Trade showsTrade shows

Contests and incentivesContests and incentives

Trade allowancesTrade allowances

Point-of-purchase displays

Point-of-purchase displays

Sales training programsSales training programs

Cooperative advertisingCooperative advertising

Types of trade-oriented promotions

Buying Allowances

Buying Allowances

Promotional Allowances

Promotional Allowances

Slotting Allowances

Slotting Allowances

Buying allowancesBuying allowances

Promotional allowances

Promotional allowances

Slotting allowances

Slotting allowances

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Types of cooperative advertising

Cooperativeadvertising

Cooperativeadvertising

Verticalcooperativeadvertising

Ingredient-sponsored

coop advertising

Horizontal cooperative advertising

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The sales promotion trap

1 2

3 4

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Summary and conclusions• Over the past two decades, marketers have been allocating

increased share of promotional budget to sales promotion.

• Sales promotion techniques can be: – consumer oriented– trade oriented.

• Sales promotion techniques include sampling, coupons, premiums, competitions, rebates and refunds.

• Sales promotion abuse can occur when marketers become overly dependent on sales promotions techniques at the expense of building long-term brand position, brand equity and customer relationships.

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sales promotion

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