2.1

Chapter 11:Chapter 11:

SALES PROMOTION:SALES PROMOTION:

CONSUMER, TRADE, CONSUMER, TRADE,

and and

BUSINESS MARKETBUSINESS MARKET

TECHNIQUESTECHNIQUES

11.1

Basic Forms of Sales PromotionBasic Forms of Sales Promotion

BASIC FORMS OF SALES PROMOTIONBASIC FORMS OF SALES PROMOTION

Trade-Market Sales PromotionTrade-Market Sales Promotion

Trade Market Sales Promotion Trade Market Sales Promotion

Business-Market Sales PromotionBusiness-Market Sales Promotion

11..211..2

The Importance and Growth of Sales PromotionThe Importance and Growth of Sales Promotion

SALES PROMOTION IS GROWING FASTER THAN ADVERTISINGSALES PROMOTION IS GROWING FASTER THAN ADVERTISING

GROWTH IN THE USE OF SALES PROMOTIONGROWTH IN THE USE OF SALES PROMOTION Demand for Greater AccountabilityDemand for Greater Accountability Short-Term OrientationShort-Term Orientation Consumer Response to PromotionsConsumer Response to Promotions Proliferation of BrandsProliferation of Brands Increased Power of RetailersIncreased Power of Retailers Media ClutterMedia Clutter

11..311..3

Sales Promotion Techniques, Like Couponing, Are Sales Promotion Techniques, Like Couponing, Are Designed to Have a Short-Term Effect on SalesDesigned to Have a Short-Term Effect on Sales

Sales Promotion in the Consumer MarketSales Promotion in the Consumer Market

OBJECTIVES FOR CONSUMER-MARKET SALES PROMOTIONOBJECTIVES FOR CONSUMER-MARKET SALES PROMOTION Stimulate Trial PurchaseStimulate Trial Purchase Stimulate Repeat PurchasesStimulate Repeat Purchases Stimulate Larger PurchasesStimulate Larger Purchases Introduce a New BrandIntroduce a New Brand Combat or Disrupt Competitors’ StrategiesCombat or Disrupt Competitors’ Strategies Contribute to Integrated Marketing CommunicationsContribute to Integrated Marketing Communications

11.511.5

Sales Promotion in the Consumer Market Sales Promotion in the Consumer Market (con’t)(con’t)

CONSUMER MARKET SALES PROMOTION TECHNIQUESCONSUMER MARKET SALES PROMOTION TECHNIQUES CouponsCoupons

Oldest and Most Widely Used Sales PromotionOldest and Most Widely Used Sales Promotion Annually, 300 Billion DistributedAnnually, 300 Billion Distributed Many AdvantagesMany Advantages Also ProblemsAlso Problems

Price-Off Deals – Offers Consumers Price-Off Deals – Offers Consumers ¢ or $ off Merchandise¢ or $ off Merchandise Premiums and Advertising SpecialtiesPremiums and Advertising Specialties

Premiums – Items offered Free or Reduced w/PurchasePremiums – Items offered Free or Reduced w/Purchase Free Premium – Provides an Item at No CostFree Premium – Provides an Item at No Cost Self-Liquidating Premium – Consumer Pays Most or Self-Liquidating Premium – Consumer Pays Most or

All Cost of PremiumAll Cost of Premium11.611.6

““Price Off” Deals ArePrice Off” Deals AreCommonly Used Commonly Used by Local Retailersby Local Retailers

11.7

Sales Promotion in the Consumer Market Sales Promotion in the Consumer Market (con’t)(con’t)

CONSUMER MARKET SALES PROMOTION TECHNIQUES (con’t)CONSUMER MARKET SALES PROMOTION TECHNIQUES (con’t) Contests and SweepstakesContests and Sweepstakes

Contest – Consumers Compete for PrizesContest – Consumers Compete for Prizes Sweepstakes – Promo where Winners are Determined by Sweepstakes – Promo where Winners are Determined by

ChanceChance Substantial Problems with BothSubstantial Problems with Both

– Regulations and RestrictionsRegulations and Restrictions– Game Becomes Primary Focus; Brand SecondaryGame Becomes Primary Focus; Brand Secondary– Hard to Get Message Across in Context of GameHard to Get Message Across in Context of Game

11.811.8

Sales Promotion in the Consumer Market Sales Promotion in the Consumer Market (con’t)(con’t)

CONSUMER MARKET SALES PROMOTION TECHNIQUES (con’t)CONSUMER MARKET SALES PROMOTION TECHNIQUES (con’t)

Sampling and Trial OffersSampling and Trial Offers Sampling – Provide Consumers with Trial OpportunitySampling – Provide Consumers with Trial Opportunity

In-Store SamplingIn-Store Sampling Door-to-Door SamplingDoor-to-Door Sampling Mail SamplingMail Sampling Newspaper SamplingNewspaper Sampling On-Package SamplingOn-Package Sampling Mobile SamplingMobile Sampling Trial OffersTrial Offers

11.911.9

Sampling is an EffectiveSampling is an EffectiveWay to Create Trial-UseWay to Create Trial-UseWithin AppropriateWithin AppropriateTarget MarketsTarget Markets

Sales Promotion in the Consumer Market Sales Promotion in the Consumer Market (con’t)(con’t)

CONSUMER MARKET SALES PROMOTION TECHNIQUES (con’t)CONSUMER MARKET SALES PROMOTION TECHNIQUES (con’t)

Phone and Gift CardsPhone and Gift Cards Product Placement (Brand Placement)Product Placement (Brand Placement) RebatesRebates Frequency ProgramsFrequency Programs Event SponsorshipEvent Sponsorship

11.1111.11

Sales Promotion in the Trade and Business MarketsSales Promotion in the Trade and Business Markets

OBJECTIVES FOR PROMOTIONS IN THE TRADE MARKETOBJECTIVES FOR PROMOTIONS IN THE TRADE MARKET Obtain Initial DistributionObtain Initial Distribution Increase Order SizeIncrease Order Size Encourage Cooperation with Consumer-Market Sales PromotionEncourage Cooperation with Consumer-Market Sales Promotion Increase Store TrafficIncrease Store Traffic

11.1211.12

Sales Promotion in the Trade and Business MarketsSales Promotion in the Trade and Business Markets

TRADE-MARKET SALES PROMOTION TECHNIQUESTRADE-MARKET SALES PROMOTION TECHNIQUES Push Strategy – Sales Promotions Directed at TradePush Strategy – Sales Promotions Directed at Trade Point-of-Purchase DisplaysPoint-of-Purchase Displays IncentivesIncentives AllowancesAllowances

– Merchandise AllowancesMerchandise Allowances– Slotting FeesSlotting Fees– Bill Back AllowancesBill Back Allowances– Off-Invoice AllowancesOff-Invoice Allowances

Sales-Training ProgramsSales-Training Programs Cooperative (Co-op) AdvertisingCooperative (Co-op) Advertising

– Vertical Cooperative AdvertisingVertical Cooperative Advertising

11.1311.13

Sales Promotion in the Trade and Business MarketsSales Promotion in the Trade and Business Markets

BUSINESS MARKET SALES PROMOTION TECHNIQUESBUSINESS MARKET SALES PROMOTION TECHNIQUES

Trade ShowsTrade Shows

Business GiftsBusiness Gifts

Premium and Specialty AdvertisingPremium and Specialty Advertising

Trial OffersTrial Offers

Frequency ProgramsFrequency Programs

11.1411.14

Frequency ProgramsFrequency ProgramsEncourage Brand Encourage Brand Loyalty Among BusinessesLoyalty Among Businesses

11.15

Sales Promotion, the Internet, and New MediaSales Promotion, the Internet, and New Media

USE OF SALES PROMOTION USE OF SALES PROMOTION BY BY INTERNET COMPANIESINTERNET COMPANIES SamplingSampling IncentivesIncentives

Loyalty ProgramsLoyalty Programs Virtual Tour of Prizes in ContestsVirtual Tour of Prizes in Contests

Use of the Internet and New Media to Implement Sales PromotionUse of the Internet and New Media to Implement Sales Promotion On-Line Promotional StoresOn-Line Promotional Stores Other On-Line Companies HelpOther On-Line Companies Help SweepstakesSweepstakes

11.1611.16

The Risks of Sales PromotionsThe Risks of Sales Promotions

CREATING A PRICE ORIENTATIONCREATING A PRICE ORIENTATION

BORROWING FROM FUTURE SALESBORROWING FROM FUTURE SALES

ALIENATING CURRENT CUSTOMERSALIENATING CURRENT CUSTOMERS

TIME AND EXPENSETIME AND EXPENSE

LEGAL CONSIDERATIONSLEGAL CONSIDERATIONS

11.1711.17

The Coordination ChallengeThe Coordination Challenge

Message CoordinationMessage Coordination Message Should Attract Attention or Offer Consumer Message Should Attract Attention or Offer Consumer

Increased Value: Reduce Price, Chance to Win a PrizeIncreased Value: Reduce Price, Chance to Win a Prize Attention and Value Act as Incentive to Choose BrandAttention and Value Act as Incentive to Choose Brand Hard to Coordinate Promotion Message with AdvertisingHard to Coordinate Promotion Message with Advertising

Media CoordinationMedia Coordination Reaching Right Target is CriticalReaching Right Target is Critical Advertising Should Always Precede Sales PromotionAdvertising Should Always Precede Sales Promotion

11.18

Conclusions From Recent ResearchConclusions From Recent Research

SHORT-TERM PRODUCTIVITY OF PROMOTIONS MUCH MORE SHORT-TERM PRODUCTIVITY OF PROMOTIONS MUCH MORE DRAMATIC THAN SHORT-TERM ADVERTISING EFFECTSDRAMATIC THAN SHORT-TERM ADVERTISING EFFECTS

1% REDUCTION IN PRICE PRODUCES GREATER RESULTS 1% REDUCTION IN PRICE PRODUCES GREATER RESULTS THAN 1% INCREASE IN ADVERTISINGTHAN 1% INCREASE IN ADVERTISING

SALES PROMOTION RARELY GENERATES LONG-TERM SALES PROMOTION RARELY GENERATES LONG-TERM EFFECTSEFFECTS

MOST POWERFUL EFFECTS COME FROM ADVERTISING & MOST POWERFUL EFFECTS COME FROM ADVERTISING & SALES PROMOTION USED TOGETHERSALES PROMOTION USED TOGETHER

11.1911.19