Lesson 8 - Promotions

Promotions What is a promotion?
Marketing Management II
Lesson 8
Jishnu Changkakoti
© 2020 Jishnu Changkakoti. All rights reserved. This material is for teaching purposes and classroom use only. No part of the content may be shared or published in public forums. © 2020 Jishnu Changkakoti. All rights reserved. This material is for teaching purposes and classroom use only. No part of the content may be shared or published in public forums.
Promotions can play an important role in IMC, if used well
TV
PR Print
•
What is the key difference between
A short term initiative to motivate
consumers & customers to buy
advertising & promotions?

more of the product
Communication Events
Promotions idea
• Promotions offer a specific

inducement to consumers to
purchase a product
Mobile Radio
3 Web
Advertising gives reasons to Promotions give incentives to The role of promotions in IMC
buy the product buy the product • Companies use promotions to drive a stronger & quicker consumer response
• Promotions and personal selling are usually most helpful in closing a sale
• Bene ts of promotions
1. Grab attention and lead consumer to the product
2. Incentivise the consumer to buy the product by providing something of value
3. Provide a distinct invitation to engage in the transaction NOW
• Promotions & the PLC
• Introduction & growth stage: drive trials and get new users
• Maturity: short term sales increase + gain new users
• Decline: short term sales increase & retain market share

© 2020 Jishnu Changkakoti. All rights reserved. This material is for teaching purposes and classroom use only. No part of the content may be shared or published in public forums. 6 classroom use only. No part of the content may be shared or published in public forums.
© 2020 Jishnu Changkakoti. All rights reserved. This material is for teaching purposes and
Promotion Categories
Trade Promotions
Trade Promotion Consumer Promotion • Why would a brand do a trade promotion?
• In what type of product categories will trade promotions be e ective, & in

what type will they be ine ective?
Consumer Promotion
fi
ff
Trade Promotions Trade Promotions
© 2020 Jishnu Changkakoti. All rights reserved.

This material is for teaching purposes and classroom use only. No part of the content may be shared or published in public forums. This material is for teaching purposes and classroom use only. No part of the content may be shared or published in public forums.
Consumer Promotions Consumer Promotions

This material is for teaching purposes and classroom use only. No part of the content may be shared or published in public forums. This material is for teaching purposes and classroom use only. No part of the content may be shared or published in public forums.
Types of Disadvantages of Promotions
Promotions
• The sales e ect is limited to the time of the promotion itself
• Usually do not encourage consumers to buy on a continual basis
• Promotions lead to competitive retaliation & can cause pro t erosion
• Overdoing promotions can reduce the image of the brand
• As a rule, promotions do not improve brand image
• Unilever - vicious cycle of “promotion, commotion, demotion”
© 2020 Jishnu Changkakoti. All rights reserved. This material is for teaching purposes and classroom use only. No part of the content may be shared or published in public forums. 14classroom use only. No part of the content may be shared or published in public forums.
Planning strategic promotions Features of a successful promotion

• A poorly designed promotion can lead to pro t and sales losses
• Provides the brand with a period of Higher payoffs
• Johnson’s baby soap with Baby Cream coupons

exclusivity which delays imitation, but Launch of attractive,
Consumer response delay
allows quick customer response

hard-to-imitate
promotion
•
Competitor response delay
Plan for failure - Chik Shampoo story
• “Monopoly Window” - time between

• Successful promotions consider 3 factors:
consumer response to the promotion Consumer response delay
and competitors’ reaction to it
Launch of easily
imitated or overly
1. how customers as well as competitors react
complex promotion Competitor response
delay Lower
2. the message delivered

• Does not depend on discounts alone, payoffs
but conveys something about the

3. the brand’s stature in the market
brand/company
• A promotion that is unique to the brand’s imagery and positioning is ideal as it cannot be • Launched by companies that have
copied e.g. “Enjoy a holiday at our own tea gardens” by Tata Tea some di erential advantage in the
market already
15classroom use only. No part of the content may be shared or published in public forums.
© 2020 Jishnu Changkakoti. All rights reserved. This material is for teaching purposes and 16classroom use only. No part of the content may be shared or published in public forums.
ff
ff

fi
Factors that in uence consumers to act quickly The best job in the world
• Economic - the purchase is made more e ective in terms of time &/or money
• Background:
• Informational - in uence consumers’ beliefs about the brand
• stagnation in international visitors
to Australia, decline for Queensland
• Ran in 2009 first with a budget of
• A ective - arouses favourable emotions & emotions and associates them with the $1.7m
• classified ads, job listings, small
brand
banners
• Done through social media, PR, word
of mouth
• Ideally a promotion should supply all three motivations
• Results
• 34,000 video entries from 200
countries
• An example of a great promotion:
• 7m site visitors
• 200,000 votes
• “The Best Job In The World”
17classroom use only. No part of the content may be shared or published in public forums.
© 2020 Jishnu Changkakoti. All rights reserved. This material is for teaching purposes and © 2020 Jishnu Changkakoti. All rights reserved. This material is for teaching purposes and classroom use only. No part of the content may be shared or published in public forums.
Sales Promotion Companies use sales promotion tools—coupons, contests, premiums, and the like—to draw a stronger and quicker buyer response, including short-run e ects
such as highlighting product o ers and boosting sagging sales. Sales promotion tools o er three distinctive bene ts: 1. Ability to be attention-getting—They draw attention and
may lead the consumer to the product. 2. Incentive—They incorporate some concession, inducement, or contribution that gives value to the consumer. 3. Invitation—They
include a distinct invitation to engage in the transaction now. Events and Experiences Events and experiences o er many advantages
Kotler, Philip; Keller, Kevin Lane. Marketing Management, Global Edition (p. 596). Pearson Education Limited. Kindle Edition.
Personal selling and sales promotion are most helpful in closing the sale. Reordering is also a ected mostly by personal selling and sales promotion and somewhat by reminder
advertising.
Thank You Product Life-Cycle Stage In the introduction stage of the product life cycle, advertising, events and experiences, and publicity have the highest cost-e ectiveness, followed by
personal selling to gain distribution coverage and sales promotion and direct marketing to induce trial. In the growth stage, demand has its own momentum through word of
mouth and interactive marketing. Advertising, events and experiences, and personal selling all become more important in the maturity stage. In the decline stage, sales
promotion continues strong, other communication tools are reduced, and salespeople give the product only minimal attention. Measuring Communication
Sales promotion, a key ingredient in marketing campaigns, consists of a collection of incentive tools, mostly short term, designed to stimulate quicker or greater purchase of
particular products or services by consumers or the trade.47 Whereas advertising o ers a reason to buy, sales promotion o ers an incentive. Advertising versus Promotion
Although sales promotion expenditures increased as a percentage of budget expenditure
ff

ff
fl
fl

ff
Although sales promotion expenditures increased as a percentage of budget expenditure for a number of years, their growth has recently slowed. Consumers began to tune out
promotions: Coupon redemption peaked in 1992 at 7.9 billion coupons but dropped to 2.9 billion by 2013.48 Incessant price reductions, coupons, deals, and premiums can also
devalue the product in buyers’ minds. Having turned to 0 percent nancing, hefty cash rebates, and special lease programs during sluggish economic times, auto manufacturers
have found it di cult to wean consumers from discounts ever since.49 Some sales promotion tools are consumer franchise building. They impart a selling message along with
the deal, such as free samples, frequency awards, coupons with a selling message, and premiums related to the product. Sales promotion tools that are typically not brand
building include price-o packs, consumer premiums not related to a product, contests and sweepstakes, consumer refund o ers, and trade allowances. Sales promotions in
markets of high brand similarity can produce a high sales response in the short run but little permanent gain over the longer term. In markets with high brand dissimilarity, they
may be able to alter market shares permanently. In addition to brand switching, consumers may engage in stockpiling— purchasing earlier than usual (purchase acceleration) or
buying extra quantities. But sales may then hit a post-promotion dip.50 Price promotions also may not build permanent total-category volume. One study of more than 1,000
promotions concluded that only 16 percent paid o .51 Small-share competitors may bene t from sales promotion because they cannot match market leaders’ advertising
budgets, nor can they obtain shelf space without o ering trade allowances or stimulate consumer trial without o ering incentives. Dominant brands o er deals less frequently
because most deals subsidize only current users. Consumer franchise-building promotions can o er the best of both worlds—building brand equity while moving product.
McDonald’s, Dunkin’ Donuts, and Starbucks have given away millions of samples of their new products because consumers like them and they often lead to higher long-term
sales for quality products.52 Gain’s “Love at First Sni ” campaign used direct mail and in-store scented tear-pads and ShelfVision TV to entice consumers to smell the product,
resulting in an almost 500 percent increase in shipments over the goal.53 The fastest-growing area in sales promotions is digital coupons, redeemed via smart phone or
downloaded to a consumer’s printer. Digital coupons eliminate printing costs, reduce paper waste, are easily updatable, and have higher redemption rates. Coupons.com gets
620,000 unique daily visitors looking for money-saving deals, and CoolSavings.com gets 120,000 seeking money-saving coupons and o ers from name brands as well as helpful
tips and articles, newsletters, free recipes, sweepstakes, free trials, free samples, and more. Many retailers are now o ering customized coupons based on consumer purchase
histories.54 One rm has devised a very di erent way for rms to o er discounts.55 Groupon Groupon
ffi
fi
ff
ff
ff
ff
ff
fi
fi
ff

Lesson 8 - Promotions

Uploaded by

Document Information

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Lesson 8 - Promotions

Uploaded by

Copyright:

Available Formats

Promotions What is a promotion?

Promotions can play an important role in IMC, if used well

advertising & promotions?

• Promotions offer a specific

1. Grab attention and lead consumer to the product

2. Incentivise the consumer to buy the product by providing something of value

3. Provide a distinct invitation to engage in the transaction NOW

• Promotions & the PLC

• Maturity: short term sales increase + gain new users

• Decline: short term sales increase & retain market share

Trade Promotion Consumer Promotion • Why would a brand do a trade promotion?

• In what type of product categories will trade promotions be e ective, & in

© 2020 Jishnu Changkakoti. All rights reserved.

Consumer Promotions Consumer Promotions

© 2020 Jishnu Changkakoti. All rights reserved.

• Usually do not encourage consumers to buy on a continual basis

• Promotions lead to competitive retaliation & can cause pro t erosion

• Overdoing promotions can reduce the image of the brand

• As a rule, promotions do not improve brand image

• Unilever - vicious cycle of “promotion, commotion, demotion”

Planning strategic promotions Features of a successful promotion

• Provides the brand with a period of Higher payoffs

• Johnson’s baby soap with Baby Cream coupons

allows quick customer response

• “Monopoly Window” - time between

2. the message delivered

but conveys something about the

• “The Best Job In The World”

You might also like