Lecture 8

Promotional Strategies 4Sales Promotion

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International sales promotion Promotion across frontiersPlanning a campaignObjectivesActivitiesDeveloping a strategic approachEvaluationRegulationApplication of sales promotion in different

countries

International Sales Promotion“The media and non-media marketing

pressure applied for a predetermined, limited period of time at the level of consumer, retailer, or wholesaler in order to stimulate trial, increase consumer demand, or improve product availability” (The Promotion Marketing Association, PMA)

(Moriarty, Mitchell & Wells, 2012, 546)

International Sales PromotionBlue Chip Marketing- Promotional Marketing

SpecialistThe use of sales promotions is increasing

worldwideSupport for advertising campaignsCost and clutter of mediaPrecise targetingTracking of promotional effectivenessStandardisation is impossibleEveryone loves a bargain/freebie!

Promotions Across FrontiersThere are few truly global campaignsThe importance of conveying consistency

has never been higherThe need to recognise variables: language,

culture, legislation, logistics, the internet, and evaluation

Promotional objectives are different – plcThe greatest strength of promotional

marketing is its flexibility and its ability to meet a client or company’s specific needs in a particular market

Promotions Across FrontiersWhat do you hope to gain?The two key benefits of running a

promotion across different markets are consistency and cost-efficiency in brand and company image

Also important are economies of scale in production and distribution, coupled with lower marketing and advertising costs

Promotions Across FrontiersWhat are the needs of our clients?Customer harmony exists across borders,

and clients are therefore pushing agencies to deliver cross-border campaigns

However, there is nothing but diversity when it comes to legislation covering promotion

(Hanson, 2002)

Routes to MarketThe easiest route is via a well-known

property or license e.g. Harry Potter, the Olympics

Local culture and knowledge cannot be ignored

In eastern Europe, consumers are still reluctant to give out personal details

In Japan and India, stores may be too small for POP displays and sampling

Planning an International CampaignThe stage of economic development is

importantThere may be no legislative restriction, but

sales promotion tools are not widely usedYou need to assess retail structures,

mechanics such as coupons need good and honest trade support

Avoid premiums in less developed markets

Planning an International CampaignConsideration needs to be paid to

campaign packaging, manufacturing and shipping costs

What data do you want to collect from the campaign?

How are you going to collect it and how will you use that information to your advantage?

(Hanson, 2002)

What can Sales Promotions Achieve?Sales promotions encourage the consumer to

buy a specific brand, to buy more than one item, or buy a preferred brand and sample another

Promotions can also build demand, build brand awareness, generate an impulse buy, motivate trial, and encourage multiple purchases

(Gerwin, 2004)

The Task of Sales PromotionThe main task of Sales Promotion is to

encourage the target audience to behave in a particular way, often to buy a product

Sales promotion offers buyers additional value, as an inducement to generate an immediate sale

These inducements can be targeted at consumers, distributors, agents and members of the sales force(Fill, 2009, p.538)

What can Sales Promotions Achieve?Sales promotions are more immediate than

advertising, and offer consumers something tangible making it easier to evaluate

Enhancements can be added to entice loyalty e.g. frequent flier programmes

(Gerwin, 2004)

Figure 12.1 Factors affecting the increasing use of sales promotions in De Pelsmacker, Geuens & Van den Bergh, 2010, 408

Figure 12.2 Basic types of sales promotions, in De Pelsmacker et al, 2010, 409

Sales Promotion3 MAIN CATEGORIESCustomer promotions – premiums, gifts,

prizes, competitionsTrade promotions – special terms, POS

materialsSalesforce promotions – incentive and

motivation schemesThe 3 P’s – Price, Product, Prize(See Smith & Taylor, 2004, pp. 355-385)

Figure 12.3 Objectives and target groups of consumer promotions in De Pelsmacker et al, 2010, 410

ObjectivesCUSTOMER SALES PROMOTIONSImprove sales of existing productsEncourage repeat purchaseEncourage trialCounteract competitive marketing

communicationsIncrease product usage

ObjectivesCUSTOMER SALES PROMOTIONSEncourage brand loyaltyDiscourage brand switchingFacilitate collection of database informationComplement other marcoms “pull” activities

ObjectivesTRADE SALES PROMOTIONSHelp introduce new product to the tradeEncourage distribution penetrationIncrease allocation of shelf spaceImprove shelf display positioningProvide extra incentives over competing

products

ObjectivesTRADE SALES PROMOTIONSHelp stimulate sales force motivationHelp overcome over-stocking problems or

slow moving linesComplement other marcoms “push” activities

Table 12.1 Consumer promotion tools in De Pelsmacker et al., 2010, 412

Sales Promotion ActivitiesSamplingCouponingPremiumsMoney-offBonus packsBanded packsCompetitions/prize drawsCause related sales promotions

Sales Promotion ActivitiesMerchandising/POS/demonstrationsInformation leaflets/packs and cataloguesLoyalty schemesContests and incentivesAllowances – discounts, additional free

products, special termsJoint promotions

Table 12.3 Trade promotion tools in De Pelsmacker et al. 2010, 424

Matching Tools with ObjectivesTrial – samplingRetrial – coupon off next purchaseIncrease usage – collections, games,

competitionsDevelop new uses – companion brand

promotions, publications, workshopsIncrease shelf space – discount, extended

credit, POS, advertising supportIncrease sales – competition, prize drawGoodwill – gifts, holidays, awards

Developing a Strategic ApproachIdentify what customers/prospects really

wantIdentify the long term marketing and

communications objectivesCreate guidelines for each product or

serviceDetermine how much of the total

marketing and communications budget is available for sales promotions

Developing a Strategic ApproachEnsure there is support and commitment

from senior management so that sufficient management expertise and funds are available for promotions to be professionally carried out

Develop a method of evaluationPlan and forecast the results

Evaluating Sales PromotionsHow good is the general idea?Will the sales promotion appeal to the

target audience?Is the idea unique or is the competition

doing something similar?Is the sales promotion presented clearly?How cost efficient and effective is the

sales promotion?

Source: De Pelsmacher et al., 2010

Sales Promotion in Hong KongMost common promotional tools used in

supermarkets: price discounts, in-store demonstrations, coupons, sweepstakes and games, and BOGOF

Consumers respond most to price discounts, BOGOF and coupons

BOGOF offers are more effective than coupons

Sweepstakes and games are less effective as consumers realise that the chance of winning a substantial prize is slim

(Shi, Cheung & Prendergast, 2005)

Sales Promotion in Hong KongPrice discounts, BOGOF offers, and

coupons were found to be most effective for encouraging stockpiling, purchase acceleration and additional spending

In-store demonstrations were found to be effective mainly in encouraging product trial

Consumers prefer tools that are simple and need less involvement, while also being able to provide transaction utility

Sales Promotion in Other CountriesKelloggs used samples and demonstrations

to enlighten customers about dry cereal and cold breakfasts in Asia

To Launch Budweiser in Great Britain, posters, flags, pennants, T-shirts and sweatshirts were used

Pfizer attracts wholesalers by sponsoring trips and other events

(Onkvisit & Shaw, 2009, 525-526)In Brazil, gas delivery people are used to

distribute product samples to households by Nestle, Johnson & Johnson and Unilever

(Czinkota & Ronkainen, 2010, 587)

Sales Promotion by Global MarketersTo fight counterfeiting in China, Disney

asked participants to mail-in hologram stickers on genuine products to win prizes

Mars invited consumers in 200 countries to vote whether a new M&M candy should be purple, aqua, or pink

To launch Orbit gum in the US, “field research teams” distributed 7 million samples, dressed as characters from the ad campaign

Guinness organised a competition in Asia to select a new bottle shape: options included bullhorn or guitar

(Keegan & Green, 2011, 462)

Finally …Sales promotion is not restricted to the

stimulation of demand at the consumer level. It may be used to gain middlemen’s support as well

Sales promotion is effective when a product is first introduced to a market. It also works well with existing products that are highly competitive and standardised, especially when they are of low unit cost and have high turnover

Sales promotion is needed to gain the “extra competitive advantage”

And …Some foreign retailers are reluctant to

accept manufacturers’ coupons because they fear that they will not be reimbursed

Consumers may review rebates, mail-in coupons, and money-back guarantees with suspicion, thinking that something must be wrong with the product

(Onkvisit & Shaw, 2009, 525-526)

ReferencesClow, K.E., & Baack, (2010) International Advertising,

Promotion and Marketing Communications, 4e. Upper Saddle River, NJ: Pearson Prentice Hall

Czinkota and Ronkainen (2010) Principles of International Marketing. 2e. Mason, OH: Cengage

De Pelsmacker, P, Geuens, M & Van den Bergh, J, (2010) Marketing Communications, A European Perspective. 4e, Harlow: Pearson Education

Fill, C., (2009) Marketing Communications, Interactivity, Communities and Content. 5e. Harlow: Pearson Education

Gerwin, A.S. (2004) Sales Promotion Planning, Point of Purchase Advertising International. Retrieved March 15, 2011 from http://www.warc.com

Hanson, M. (2002) Globalisation promotions across frontiers, Admap, , February, Issue 425

ReferencesKeegan, W.J. & Green, M.C., (2011) Global Marketing, 6e.,

Harlow: Pearson EducationMoriarty, S., Mitchell, N., & Wells, W., (2012) Advertising and

IMC, 9e. Upper Saddle River, NJ: Pearson EducationShi, Y., Cheung, K., & Prendergast, G. (2005) Behavioural

Response to Sales Promotion Tools, A Hong Kong Study, International Journal of Advertising, Vol. 24, No. 4. Retrieved March 15, 2011 from http://www.warc.com

Smith, P., and Taylor, J., (2004) Marketing Communications, An integrated approach. 4e. London: Kogan Page

White, R. (2008) Sales promotion and the brand, Warc Best Practice, July. Retrieved March 15, 2011 from http://www.warc.om/Content/PrintViewer.aspx?MasterContentRef=bfdda7cl-26f4-4

White, R. (2002) Sales promotion and the brand, Admap, Issue 430, Iuly. Retrieved March 15, 2011 from http://www.warc.com