Sales Promotion

1
Sales Promotion

• Is an incentive to get customers, channel
  members, or the sales force to take some action
  (like buying)
• Has 2 basic types
• Price reduction effect (e.g. rebates, coupons)
• Incentive based on something other than
  price(e.g. a contest)
• Clow and Baack -- 2 basic types
• Franchise Building
• Sales Building
• Always conveys one or more messages, intended or
  unintended

2
Good Times or Reasons to use Sales Promotion

• When price promotion is consistent with brand
  image or positioning
• When introducing a new product
• When trying to move inventory, or trying to get
  the most out of a bad idea (e.g. a clothing line
  that didnt work out)
• In maturity competing on price
• But be careful what message is conveyed

3
Sales Promotion is good for

• Getting attention
• Getting liking (maybe)
• Getting cognitive involvement (contests
  sweepstakes)
• Getting trial
• Getting purchase
• But again, be careful what message is conveyed

4
Types

• Coupons
• Premiums
• Contests sweepstakes
• Refunds rebates
• Sampling
• Bonus packs
• Price-offs
• Combinations of the above

5
Coupons

• FSIs most common
• Avg. redemption rate about 2, but gt20 for
  Internet coupons
• Brand-loyal customers redeem about 80 of
  coupons both bad and good
• Illegal redemption
• Use couponing to reinforce brand already in
  evoked set

6
Other Types, some detail

• Premiums
• Use premiums with perceived value
• Premium should relate to the product or at least
  to the audience
• Problems time and cost
• Contests and Sweepstakes
• More engaging but tie to decision process and
  hierarchy of effects
• Use both extrinsic and intrinsic value
• Problems cost, indifference, clutter

7
More types and detail

• Refunds and rebates
• Problems costs, expectations,
  time-to-reinforcement
• Sampling
• Introduce a new product
• Problems costs, effective distribution

8
Even more types and detail

• Bonus Packs
• Can get brand switching
• Tough to figure right amount of give away
• Price-offs
• Message?
• Business-to-business
• Few FSIs
• More emphasis on premiums, contests/sweepstakes,
  sampling, and bonus packs

9
Key Aspects of Sales Promotion to Keep in Mind

• Its an extra incentive
• Its a sales accelerator, often
• Often the channel is the target
• It can be consumer oriented, trade oriented, or
  aimed at business customers

10
Use of Sales Promotion has grown due to

• Power of retailers
• Lower brand loyalty
• More sensitivity to promotion
• More brands
• Fragmented consumer market
• Short term view
• More accountability
• Competition
• Clutter

11
Purposes of Trade Oriented Sales Promotion

• New product distribution
• Maintain trade support and market share for
  established products
• Get display and other kinds of promotional
  support
• Build channel inventories