Sales Promotion

1
Sales Promotion
PERSONALSELLING
ADVERTISING
SALESPROMOTION
PUBLICITY
2
Sales Promotion Importance

• Growth in United States
• Exceeds 250 billion dollars a year
• Increasing percentage of promotional dollars
• Consumer goods companies spend more on sales
  promotions than advertising

3
Sales Promotion
Definition any activity or material used as a
direct inducement to purchase

• Objective Bolster/complement other promotional
  mix elements during a specific time period
• Targeted toward
• Sales force
• Wholesalers and retailers
• Consumers

4
Sales Promotion Methods for Consumers
Product sampling, demonstrations
Contests, games sweepstakes
5
Sales Promotion Methods for Consumers
Multiple purchase offers, Frequent-user incentives
6
Classifying Types of Sales Promotion
Promotional pricing
Non-price promotions
Sampling

• Price reductions
• Free goods
• Tied offers
• Money off next purchase
• Loss leader pricing
• Cheap credit

• Most effective in the early stages of a new
  product launch (1 use for coupons)
• Important for food products
• Very expensive

• Contests
• Free gifts
• Self-supporting offers
• Multi-brand promos s
• Guarantees and added services

7
Rebates A Consumer Information Source

• Buyers fill out rebate forms with names,
  addresses and household data about
  customers
• - directly targets price cuts to customers
• - 5-10 are redeemed (A Phantom discount)

Pepsi offers a 5 rebate on the Home Alone video
8
Rebates are often effective at changing purchase
probabilities, even for big-ticket items
9
Coupons, too, can be effective at getting
consumers to purchase specific products
10
Number of Coupons Redeemed Per (International)
Household in 1992

11
USA Coupon Redemption

• 1990 1992 1993 1994 1995
• Distribution 279 310 300 310
  292
• Redeemed 7.1 7.7 6.8 6.2
  5.8

12
Snapple Yard Sale Refreshes Sales Drive

• The idea is about brand loyalty, getting more
  people to buy bottles, collect caps and buy stuff
  at the Snappleton yard sale, an online town on
  Snapple.com Ms. Bernstein, Senior V.P.

• Involvement Collecting bottle caps.
• Silver cap (16 oz.)- ice tea products
• Yellow caps (Lemonade products)
• White caps (20-32 oz. bottles.)

Source Direct Mktg News, 2004
13
Snappleton Yard Sale

• Unique merchandise like Quicksilver apparel,
  Lite-Bright, Nintendo Game Boy Advance and
  Piaggio Scooter.

• Objectives Increase users aged -15 to 24.
• Use the internet to pique curiosity in a
  competitive U.S. beverage market, (Coca-Cola Co.
  and Pepsi Co.)

• Snapple operates off a really low budget , doing
  more with less.

14
Sales Promotion Methods for the Trade

• Trade shows
• Contests, free merchandise
• Display equipment, P-O-P materials
• Cooperative advertising promotions
• Vertical - channel members
• Horizontal - group of retailers
• Allowances (buying vol., buy-back, scan-back,
  merchandise)
• Premium or push money, slotting allowances

15
Trade Shows
Selling objectives
Non-selling objectives
Maintain relationship Transmit messages to key
accounts Remedy problems Add-on sales
Maintain image Test products Gather competitive
intelligence Widen exposure
Current customers
Contact prospects Determine needs Transmit
messages Commit to call back or sale
Contact prospects Foster image building Test
products Gather competitive intelligence
Potential customers
16
Proportion of Promotional Expenditures
Trade sales promotion
Consumer sales promotion
Advertising
17
Sales Promotion, Pro and Con

• Disadvantages
• Only short-term
• Hidden costs
• Confusion
• Price cutting -Brand image
• Postponement effect
• Significant government regulation
• Lack of effectiveness sometimes (learning effect)

• Advantages
• Motivation method for special efforts
• Short-term sales increase
• Defined target audience
• Defined role/objectives
• Indirect roles (e.g., wider distribution)

18
A Benefit Congruency Framework of Sales Promotion
Effectiveness
Are monetary savings the only explanation for
consumer response to sales promotions? If not,
how do the different consumer benefits of sales
promotion influence its effectiveness?
Six Benefits
Savings Quality Convenience
Value expression Exploration
Entertainment
JrlMktg,Oct.2000
19
Sales Promotions Benefit Matrix
Positioning Map
High
Free Gifts
Hedonic
Low
Low
High
Utilitarian
20
Study 4 Design and Procedure
21
Study 4, Conclusions

• 1. Monetary saving is not the only consumer
  benefit
• 2. Consumers distinguish six benefits
• Six benefits grouped between Utilitarian and
  Hedonic
• All six (except quality) are significant
  predictors of overall evaluation
• 5. Monetary promos provide more Utilitarian
  benefits than Hedonic benefits

22
Study 5 Benefit Congruency EffectDesign and
Procedure
23
Study 5, Conclusions

• 1.Sales promos provide benefits beyond monetary
  savings
• 2.Nonmonetary promos provide more Hedonic
  benefits
• 3.For High End brands, sales promos are more
  effective
• 4.Monetary promos can destroy market share when
  offered with incongruent high equity hedonic
  brands competing against low-priced brands

Discussion of Studies 4 and 5

• Proof of congruency between needs of products and
  monetary promotions
• Negative effects of some promotion were due to
  lack of relevance

24
Role of The Promotion Mix

• Promotion is an organizations unique set of
  communications (stimuli) designed to influence
  (inform, persuade remind) selected target
  audiences into desirable responses.
• Who says what to whom, in what setting , by which
  channels, with what purposes.
• Promotion facilitates (efficient) exchange