16

Sales Promotion

McGraw-Hill/Irwin Copyright © 2009 by The McGraw-Hill Companies, Inc. All rights reserved.
 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 A tool to
incentive to buy speed up sales

Targeted to
different parties
 Sales Promotion Vehicles

Consumer-Oriented Trade-Oriented
Samples Contests, incentives

Coupons Trade allowances

Premiums Point-of-purchase displays

Contests/sweepstakes Training programs

Refunds/rebates Trade shows

Bonus Packs Cooperative advertising

Price-off deals

Frequency programs

Event marketing
• Consumer promotion $350 Billion
• Trade promotion $150 Billion
• 60 to 75% of budget on sales
promotion
• Trade promotion 50% of package
goods 27% to consumer promotion
San Diego Padres Boost Attendance

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 Long-Term Budget Allocations

100%
90%
Consumer Promotions
80%
70%
60% Media Advertising
50%
40%
30%
20% Trade Promotions
10%
0%
‘94 ‘95 ‘96 ‘97 '98 ‘99 ‘00 ‘01 ‘02 ‘03 ‘04 ‘05

% of Total Promotional Dollars, 3-yr Moving Average

Media Often Delivers a Promotion Message
 Sales Promotion Increases

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
 Consumer Franchise-Building Promotions

Promotional Objectives

Communicate Develop and

distinctive brand reinforce brand Build long-term
attributes identity brand preference

Techniques and Practices

“Frequency” Sweepstakes & Premium offers

programs contests to build that reinforce the
encourage equity, increase brand image and
repeat purchase involvement help build equity
Nonfranchise-Building Promotions

Objectives

Accelerate the Generate an

purchase decision immediate sales
process increase

Limitations

Do not identify Do not contribute

unique brand to brand identity
features or image
Contests Can Build Brand Equity
 Nonfranchise-Building Promotions

May Include . . .

Rebates or
Price-off deals Bonus packs
refunds

Shortcomings

Customers may
Trade promotions If they do, they
“buy price”
benefits may not may lead only to
rather than
reach customers price reductions
brand equity
Objectives of Consumer-Oriented Promotions

To increase
consumption of
an established
brand

To defend
To obtain trial (maintain)
and purchase Objectives current
customers

Enhance IMC
To target a
efforts and build
specific segment
brand equity
 Sampling

Sampling Works Best When

The product can

be broken into a
The products The purchase
small piece or size
are of relatively cycle is
that reflects the
low unit value relatively short
full features and
benefits
 Sampling Methods

Door-to-door

Methods Direct mail

In-store
On package

Event

Newspaper/magazine insert
Internet sites
Distributing Samples With Newspapers
Armor All Uses On-Package Samples
 Couponing

The Nearly
oldest and 240 billion
most widely used distributed each
sales promotion tool year in the US

85% of
consumers
use coupons;
21% use them regularly
 Pros and Cons of Coupons

Advantages Disadvantages
Hard to tell how many
Appeals to price sensitive
consumers use them and
consumer
when

Can offer price break Often used by loyal

without retailers co-op consumers who may
purchase anyway
Declining redemption rates
Effective way to induce
and high costs of
trial of products
couponing

Can be way to defend

market share and Misredemption and fraud
encourage repurchase
Coupons are Most Often Used With…

Disposable Laundry
Cereal
Diapers Soap
Coupon Distribution

Other
Magazines
In / On Pack
Direct Mail
Newspaper Coop
Newspaper ROP
Freestanding
Inserts
The Most Popular Coupons are FSIs
Coupon Redemption Rates
Valpak Enhances Value of Coupons
 Types of Coupons

In/on-pack In-store

Bounce-back Tear-off pads

Cross-ruff Handouts

Instant Dispensers

Register printout
Coupons are Available Electronically
 Premiums

An offer of an item, merchandise, or

service, free or at a low cost, that is
an extra incentive for customers

Types of Premiums

Self-liquidating:
Free:
consumer required to
Only requires purchase
pay some or all of the
of the product
cost of the premium
Airline Miles are a Popular Incentive
More Consumer-Oriented Promotions

Contests and
sweepstakes

Refunds and
rebates

Bonus packs

Loyalty programs

Price-off Deals Event marketing

 Trade Oriented Promotions

Obtain distribution for new

products
Objectives
Maintain support for
established brands

Encourage display of
products

Build retail inventories

 Types of Trade Oriented Promotions

Contests and incentives

Co-op Advertising
Types
Trade allowances

POP displays
Buying

Sales training Promotional

Trade shows
Slotting
Coordinating Sales, Advertising, IMC Tools

Budget
allocation

Coordination of
themes
Media support
and timing
Problems With Sales Promotion
Aspects of Consumer Promotions

Economic

Informative Affective