Sales Promotions

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Sales Promotions
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Types of sales promotions

• Trade promotions
• Advertising allowances, joint promotions,
  training, slotting allowances
• Consumer promotions
• Coupons, rebates 330b cpns, face value 194b
• Deals / discounts

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Trade promotions growing. Why?

• Growing retailer power
• Lower brand loyalty
• Competition
• Retailers have demand data and are in a better
  bargaining position

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Types of consumer promotions

• Coupons in pack / on pack / FSI coupons
• Rebates cash refund
• Premiums - buy two, get a free toy / t-shirt for
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• Deals / discounts/ price bundles
• Samples
• Sweepstakes
• Contests
• Continuity programs frequent flier miles
• POP Point of purchase displays

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Types of Trade promotions

• Price-offs
• Allowances
• Buy-back guarantees
• Free goods
• Displays
• Premiums
• Sales contests
• Trade shows
• conventions

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Who is a coupon prone household ?

• Income Low medium high
• Education Low Medium high
• Family size Large/small
• Small children Y/N
• Home owners / renters
• Car owners
• Are coupons profitable?
• Redemption / Misredemption

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How Sales Promotions Work ?

• Blattberg, Briesch, Fox - Marketing Science 1997
• Temporary price reductions substantially increase
  sales
• Higher market share brands are less deal elastic
• The frequency of deals changes the consumers
  reference price
• Greater the frequency of deals, the lower the
  height of the deal spike

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How Sales Promotions Work?

• Cross promotional effects are asymmetric -
  promoting higher quality brands impacts weaker
  brands more than vice-versa
• Retailers pass through less than 100 of the
  trade deals
• Display and feature advertising have strong
  effects on item sales
• Advertised promotions can result in increased
  store traffic
• Promotions affect sales in complementary and
  competitive categories

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Sales Promotions

• Majority of promotional volume comes
• from switchers
• category expansion
• Store switching
• purchase acceleration
• Stockpiling
• Promotional elasticities are greater than price
  elasticities

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Public relations

• News releases
• News conferences
• Public service announcements
• Talk shows, football games, book signings,
  autograph sessions

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Joint promotions

• Advantages?
• Disadvantages?