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Chapter 18
Sales Promotion
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Sales Promotion

• Using incentives to create a perception of
  greater brand value
• Consumer Market
• Induce household consumers to purchase a firms
  brand
• Trade-Market
• Motivate distributors, wholesalers, and retailers
  to stock and feature a brand
• Business Buyer
• Cultivate buyers in large corporations who make
  purchase decisions

Ch 18 Sales Promotion 2
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Sales Promotion Examples

• Coupons

Contests
Trade Shows
Sweepstakes
Allowances
Gift Cards
Price-off deals
Sampling
Incentives
Premiums
Brand placements
Ch 18 Sales Promotion 3
Loyalty Programs
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Importance of Sales Promotion

• 100 billion in 2000
• Growth rate 9 12 percent
• Reasons for growth
• Demand for accountability
• Short-term orientation
• Consumer response to promotions
• Proliferation of brands
• Increased power of retailers
• Media clutter

Ch 18 Sales Promotion 4
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Objectives for Consumer-Market Sales Promotion
1. Stimulate trial purchase 2. Stimulate
repeat purchases 3. Stimulate larger
purchases 4. Introduce a new brand
5. Combat or disrupt competitors
6. Contribute to IMC
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Consumer-Market Sales Promotion Techniques

• 1. Coupons 2. Price-off deals
• 3. Premiums 4. Contests/sweeps
• 5. Samples trials 6. Phone gift cards
• Brand placements 8. Rebates
• Frequency programs
• Event sponsorship

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Coupons are the most widely used form of consumer
sales promotion
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Coupons

• Entitles a buyer to a price reduction for a
  product or service
• Advantages
• Give a discount to price sensitive consumer while
  selling product at full price to others
• Induce brand switching
• Timing and distribution can be controlled
• Stimulates repeat purchases
• Gets regular users to trade up within a brand
  array

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Coupons

• Disadvantages
• Time of redemption cannot be controlled
• No way to prevent current customers from
  redeeming coupons
• Coupon programs require costly administration
• Fraud is a serious, chronic problem

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Price-Off Deals

• Offers consumer reduced price at point of
  purchase through specially marked packages
• Advantages
• Controllable by manufacturer
• Can effect positive price comparisons
• Consumers believe it increases value of a known
  brand
• Disadvantage
• Retailers believe it creates inventory and
  pricing problems

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Premiums and Advertising Specialties

• Premiums free or at a reduced price with another
  purchase
• Free premiums provide item at no cost
• Self-liquidating premiums require consumers to
  pay most of the cost of the item
• Advertising specialties
• A message placed on a free, useful item

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Premiums attract attention to a brand and offer
the consumer something for free
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Contests and Sweepstakes

• Contests consumers compete for prizes based on
  skill or ability.
• Sweepstakes winners picked by chance
• Both create excitement and interest
• But . . .
• Legal and regulatory requirements are complex
• Consumers may focus on the game rather than the
  brand
• Difficult to get an IBP message across in a game

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Samples and Trial Offers

• Sampling Giving consumer an opportunity to use a
  brand on a trial basis with little or no risk
• Types of sampling
• In-store Newspaper
• Door-to-door On-package
• Mail Mobile
• Trial offers
• Used for more expensive items
• Consumer tries product for a fixed time

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Phone and Gift Cards

• Manufacturers offer either for free or for
  purchase debit cards
• with phone time
• or preset spending limits
• Examples include offers from Lexus, Oldsmobile,
  and The Gap.

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Rebates

• Money back offer requiring the buyer to mail a
  request for money back from the manufacturer
• Often tied to multiple purchases
• Many consumers fail to bother sending the request

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Frequency Programs

• Also known as continuity programs
• Offers customers discounts or free products for
  repeat patronage
• Common in airline, travel, and restaurant
  businesses

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Event sponsorship

• When a firm sponsors or cosponsors an event, the
  brand gains credibility with the event audience
• Now the fourth most popular form of promotion in
  U.S.
• Most preferred venue sporting events

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Sales Promotion Directed at Trade and Business
Buyers

• ObjectivesUse a push strategy Push the
  product into the distribution channel to the
  consumer
• Obtain initial distribution
• Increase order size
• Encourage cooperation with consumer market sales
  promotions
• Increase store traffic

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Trade-Market Sales Promotion Techniques

• Point-of-purchase displays
• Incentives Push money
• Allowances Merchandise allowances, slotting
  fees, bill- back allowances, off-invoice
  allowances
• Sales Training Programs
• Cooperative (Co-Op) Advertising

Ch 18 Sales Promotion 20
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Business Market Sales Promotion Techniques

• Trade Shows
• Business gifts
• Premiums and advertising specialties
• Trial offers
• Frequency programs

Ch 18 Sales Promotion 21
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Trial offers are very effective in the business
market. Why?
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Sales Promotion, the Internet, and New Media

• Big tech companies give away their products
• Sampling removes risk associated with consumer
  trial
• Internet firms use incentives to make Web sites
  sticky
• Internet is used to implement sales promotions

Ch 18 Sales Promotion 23
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Risks of Sales Promotion

• Create a price orientation
• Borrow from future sales
• Alienate consumers
• Time and expense
• Legal considerations

Ch 18 Sales Promotion 24
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Coordination Challenge

• Message coordination
• Media coordination
• Research conclusions
• -Short term effects can be dramatic
• -Short term effects are often not profitable
• -Rare for long-term effects to occur
• -Most power effects result from advertising
• and sales promotion being used together

Ch 18 Sales Promotion 25