Sales Promotion

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Sales Promotion

• MKT 846
• Professor West

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Agenda

• Super Bowl Highlights
• Thinking beyond creating awareness, interest, and
  an image for your brand
• Providing incentives to purchase
• Using Promotions to Build Your Brand
• Battling for shoppers in the aisle

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Sales Promotions

• Advertising has a long and colorful history
• Many of the images created by advertisers have
  become cultural icons
• The Marlboro Man, Ronald McDonald, Pillsbury
  Doughboy, Energizer Bunny, AFLAC duck...
• The Mastercard Priceless Commercial played off
  of these icons to convey the importance of their
  product

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Sales Promotions

• Sales promotion also has a very rich history
• Coupons have been around since 1895 when C.W.
  Post began using penny-off coupons to sell Grape
  Nuts
• PG began using coupons in 1920 good for
  discounts or BOGOF.
• In 1912 Cracker Jack began offering a prize in
  every box
• Oscar Mayer introduced the first Weinermobile
  in 1936, eight still cruise the highways playing
  versions of the jingle.
• Pepsi launched their Pepsi Challenge in 1975 as
  one of the most successful promotions ever used
  to attract users of a competing brand

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Sales Promotions

• Sales promotion also has a very rich history
• Pillsbury launched its first Bake-off in 1949,
  it has since become an institution and the
  nations most prestigious cooking competition
• In 1981 American Airlines AAdvantage frequent
  flier program was launched and created a new
  currency for travelers

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Sales Promotion

• Sales promotion is used to provide a direct
  inducement that offers extra value to the sales
  force, distributor, retailer, or end consumer
  with the primary objective of boosting sales.
• While advertising appeals to the minds and hearts
  to give consumers a reason to buy, promotions
  appeal to the pocketbook and provide an incentive
  to buy.

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Sales Promotion

• Trade-Oriented
• Dealer incentives
• Contests
• Trade Allowances
• POP displays
• Training programs
• Trade shows
• Co-op advertising

• Consumer-Oriented
• Coupons Rebates
• Samples
• Bonus packs
• Price-offs
• Contests Sweepstakes
• Frequency programs
• Event marketing

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Industry Trends

• Consumer sales promotion increased from 56
  billion in 1991 to nearly 100 billion in 2001.
  An additional 150 billion is targeted to
  retailers and wholesalers.
• Starting in the late 80s a shift in marketing
  budgets has boosted sales promotion sharply.
  Currently, marketers spend between 60 and 75
  percent of their budget on sales promotion, with
  the remainder allocated to media advertising.
  Seventeen percent of advertising is devoted to
  promotional messages.

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Reasons for Growth

• Mature industries and increased accountability
  managers pay depends on ROI
• Growing power of retailers (optical scanners,
  consolidation)
• Market saturation (nearly 30,000 products are
  launched each year compared to 2,700 on 1980)
• Advertising clutter fragmentation (regional
  efforts and targeted markets are better suited to
  promotions)
• Short-term Focus it generates immediate and
  measurable results

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Slippery slope

• Increased promotional (price) sensitivity
• Forty-two percent of package-good volume was
  purchased on promotion. Twenty-four percent
  involved the use of a coupon.
• More than seventy percent of purchase decisions
  are made in the store, where people are likely to
  respond to POP offers.
• (Promotion Decisions Inc. study tracked 33,000
  consumers)

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Slippery slope

• Declining brand loyalty
• Consumers tend to have more than one brand in
  their repertoire and have been conditioned to
  switch when deals are offered.
• What is this doing to the brand equity companies
  have paid so dearly to build?

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Prisoners Dilemma
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Non-franchise Building Promotions

• Price oriented deals, such as coupons, samples,
  bonus packs, and discounts are useful mechanisms
  for encouraging trial and acquiring new
  customers
• However, you run the risk of eroding profits and
  increasing consumer price sensitivity
• Price discounts dont allow you to discriminate
  between price sensitive and insensitive buyers
• Coupons allow you to price discriminate, but they
  tend to be used by your loyal consumers
• Consumers tend to forward buy, or stockpile when
  deals are offered

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Franchise Building Promotions

• Rather than using a one-time offer, many
  companies are developing frequency programs that
  encourage repeat purchase and long-term patronage
• In order for this to be effective you have to
  make sure that the rewards are meaningful and are
  actually generating additional revenue

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Building Relationships WithBoots The Chemists
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Boots The Chemists

• Largest pharmacy chain in Britain
• J. Walter Thompson launched a strategic
  relationship building IMC campaign
• Elements of the campaign
• Focus Group Research revealed
• Consumer perceptions man in the white coat,
  trusted authority
• New positioning
• Understanding, stimulating, personalized,
  fulfilling, enjoyable
• Look good and feel good
• Target Audience
• 83 of customers are women

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Boots The Chemists

• Elements of the campaign
• Objectives
• Increase profitability by increasing frequency of
  visits and amount spent per visit
• Enroll 8 million cardholders in 12 months
• Achieve an incremental sales increase of 3.2
  percent

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Boots The Chemists

• Elements of the campaign
• Promotional Strategy
• Focus on young women who could be motivated to
  treat themselves rather than deal-seekers
• Message Delivery
• In-store material staff training followed by
  television

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Boots The Chemists

• Elements of the campaign
• Creative Strategy
• Boots Rescue
• Resolution
• Evaluation
• Launch produced a database of 8 million BTC
  customers
• More than 3 percent sales increase in year 1, 8
  percent in year 2
• Cardholders average purchase was 8 percent high
  than non-cardholders

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Boots The Chemists

• Keys to Success
• Careful target market selectiongoing after young
  women and offering the something they wouldnt
  ordinarily splurge on
• Move beyond the pocketbook offering a reward
  that people will get excited about
• Opportunity to leverage their database

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Franchise-Building Promotions

• Contests are used to energize the brand

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2004 Reggie Gold - ATT Wireless American Idol

• Marketing Overview
• Wireless telephones are today's essential item,
  particularly for the core young adult,18-35
  audience
• Sending text-based messages via cell phone
  screens--is the big opportunity for the industry.
  
• "Texters" are more likely to be both frequent
  wireless users and more prone to upgrade
  handsets, offering an enormously lucrative
  revenue stream to ATT Wireless.
• While 80 of ATT Wireless subscribers have
  phones that are text-enabled, national numbers
  showed that only 12 of wireless users were
  sending text messages prior to the promotion.

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2004 Reggie Gold - ATT Wireless American Idol

• Promotion Objectives
• Trial Frequency
• Introduce the idea of text messaging to the
  target through hands-on experience. Research
  revealed that only by trying the service can
  someone understand how fast, easy and practical
  it is.
• Create a frequency habit, both among new users
  and "light" texters who average only 0-5 text
  messages per month.

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2004 Reggie Gold - ATT Wireless American Idol

• Promotion Strategy Tactics
• Sponsorship alone does not get the register to
  ring.
• ATT Wireless teamed up to convert the huge
  audience and buzz surrounding American Idol 2
  into real measurable revenue.
• Created TextTV -- Negotiated the right to vote
  via ATT Text Messaging was the pivotal element
  in our plan as we moved beyond product placement
  and gave viewers the ability to actively
  participate in the show via text.
• Fans with ATT Wireless merely dialed the short
  code to vote for their favorites.

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2004 Reggie Gold - ATT Wireless American Idol

• Promotion Strategy Tactics
• Frequency was generated by providing customers
  the chance to "Live Like an Idol." An exclusive
  sweepstakes offered fans the chance to live the
  good life just like Ruben or Clay.
• To enter, all they had to do was register once
  via an initial text message. After that, every
  text message they sent to anyone, counted as
  another entry--all promoting frequent,
  real-world, peer-to-peer usage.
• Plus to give them lots of reasons to text, ATT
  Wireless subscribers had exclusive access to Idol
  Alerts, trivia, polls and more, all through
  text-enabled phones.

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2004 Reggie Gold - ATT Wireless American Idol

• Promotion Strategy Tactics
• Grand Prize Ultimate Idol Experience (a trip to
  New York or L.A. with an entourage of 10 friends
  including limos, 1st class hotel and shopping
  spree)
• Weekly winners won trips to the show
• 10,000, American Idol karaoke parties for local
  buzz
• American Idol T-shirts and CDs

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2004 Reggie Gold - ATT Wireless American Idol

• Results
• Of the average 18 million votes per week cast by
  the American Idol audience, 15 were via ATT
  Wireless text messages. (Nearly one thousand text
  votes per second!)
• One-third of all promotion participants had never
  sent a text message before...indicating enormous
  trial and fulfilling our first objective.
• Sweepstakes registrants sent an average 23 text
  messages during the promotion, a significant (and
  significantly habit-forming) increase over the
  0-5 messages per month sent by the targeted users
  prior to American Idol 2.

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2004 Reggie Gold - ATT Wireless American Idol

• Keys to Success
• Understand what motivates your target market
• Live Like and Idol
• Its all about finding the right fit
• Youth American Idol
• Set clear objectives and design the promotion
  around them
• Ingenious!

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Super Reggie 2003Brawny Man

• Marketing Overview
• Despite over 90 awareness, Georgia-Pacific
  recognized that the Brawny Man icon no longer
  seemed relevant to consumers, and it needed to
  work out a new regimen to increase sales.

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Super Reggie 2003Brawny Man

• Promotion Strategy Tactics
• A summertime contest was launched that asked
  women to send in photos and 150-word descriptions
  explaining why their guy is as rugged as the
  product.
• One dozen semi-finalists traveled to New York
  City for photo sessions, and the grand-prize
  winner got a Dodge Durango and a limited run as
  the packaging model. Dedicated TV spots, print
  ads in USA Today and People magazine, and an
  eight-market mobile tour supported.

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Results

• During the promotion period (May-October), brand
  volume grew more than 12.3, five times more than
  the entire category
• Brand share increased from 10.5 to 11.5 during
  these months
• At the campaign's peak in June 2002, brand volume
  was up 31 vs. the year before and Brawny had its
  highest monthly dollar (13.2) and unit (12.8)
  share for the year.
• Profits for Brawny increased 5 million as a
  direct result of the promotion.

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Franchise-Building Promotions

• Trade promotions can be used to create win-win
  opportunities

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Nike at the Finish Line

• Choose to play campaign
• Target Market 19 year-old action addicted
  college students who are role models for
  teenagers and adults wistfully recalling their
  college days.
• Objectives
• To support Nike brand as a leader in exciting,
  stylish, innovative and high performance footwear
  and apparel among 65 percent of Finish Line
  customers.
• Create a competitive advantage for Finish Line
  and the destination for Nike products among 85
  percent of target consumers.

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Nike at the Finish Line

• Choose to play campaign
• Objectives
• Increase retail store traffic and web traffic by
  20 percent
• Increase sale of Nike brand products through
  Finish Line by 15 percent in one year.

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Other Elements

• Finish Line Magalog featured articles on
  athletes such as MJ, Mia Hamm, and Derek Jeter
• Training of sales associates using Nikes Ekins
• Direct mail and winners circle frequency program

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Results

• Overall sales of Nike brand through Finish Line
  increased by 20 percent
• Calls to Finish Line store locator increased by
  200 percent following the first run of print
  advertising
• Retail traffic increased by 17 percent
• FL customer tracking study showed that the
  percentage of customers viewing FL as the best
  destination for Nike increased from 20 to 62
  percent after one year.

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Battling for shoppers in the aisles

• Marketers make their products shout at
  consumers from the store shelves Visi-strobe

One of the latest high-tech in-store marketing
devices is a mini-strobe activated by passing
movement. It brightly lights a product, like
this Mountain Dew bottle, to make it stand out
from nearby competitors.
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Battling for shoppers in the aisles

• Floor mat ads make audio announcements when
  people step on them

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Battling for shoppers in the aisles

• Stores are trying to reduce the clutter of
  marketing messages (shopping spam) delivered in
  the stores.
• Supermarkets are being designed more around the
  consumers mind-set rather than the traditional
  warehouse.

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Battling for shoppers in the aisles

• Retailers new mantra is to brand the shopping
  experience so customers are aware of where
  theyre shopping.

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Next Time

• Readings
• Chapters 18 19
• Topic
• Direct Marketing and Customer Service