Prentice Hall, © 200916-1 Sales Promotion, Events, and Sponsorships Part 5: Principles: How to Win...

16-1Prentice Hall, © 2009

Sales Promotion, Events,

and Sponsorships

Part 5: Principles: How to Win the Battle of the Buzz

Chapter 16


Questions We’ll AnswerQuestions We’ll Answer

• Which principles drive the use of sales promotion and what are some current trends?

• How are various consumer promotions used? • What are the types and purposes of trade

promotions?• How do other types of promotions—sponsorships

and events, interactive promotions, loyalty programs, and co-marketing programs—work?

• How are promotions used strategically in marketing in terms of brand building, new product launches, integration, and effectiveness?

CHAPTER KEY POINTS


• When a marketer increases the value of its product or brand by offering an extra incentive to purchase it.

• Designed to encourage action.• AMA: “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.”

• Sales promotion is primarily designed to motivate people to act by offering incentives.

What is sales promotion?What is sales promotion?

THE PRACTICE OF SALES PROMOTION


• In the past, advertising had dominated marketing spending.

• Today, more than 2/3 of all firms plan promotions as part of their strategy.

• Global incentive programs have increased dramatically; online promotions are growing at a rate of about 27% annually.

Changes in the IndustryChanges in the Industry



• Pressure for short-term profits – Rising cost of mass (traditional) media

• Need for accountability– Sales promotions are easy to track and evaluate

• Escalation of traditional media costs– Promotions cost less and deliver tangible results

• Easier and quicker to determine if objectives have been met– Usually, there’s an immediate response

• For consumer, risk is reduced– Added value from coupons, rebates, discounts

Reasons for GrowthReasons for Growth



Growth from Marketplace ChangesGrowth from Marketplace Changes


• Consumer behavior– Shoppers switch more easily

• Pricing– Consumers expect coupons, sales, discounting

• Market share– Increased switching leads to increased market share

• Parity products– Promotions can distinguish between similar products

• Power of the retailer– Wal-Mart, Home Depot, Toys “R” Us and others

demand promotional incentives


• Consumer – Targeted to consumer: people like you and me

• Trade – Targeted to people/companies in the

distribution channel such as buyers, brokers, distributors, wholesales, dealers, franchisees, retailers, etc.

• Sales Force– Directed at the firm’s salespeople to motivate

them to increase their sales including training, sales presentations, support materials, incentives, performance bonuses, contests

Categories of Sales PromotionCategories of Sales Promotion



• Price Deals—temporary price reduction or sale price– Cents-off deal– Price-pack deals (something extra; prize in

cereal box)– Bonus packs (25% more lotion)– Banded packs (toothpaste and brush)

• Coupon — discount on the price of the product– Retailer: redeemable only at their outlet– Manufacturer: at any outlet carrying the product

CONSUMER PROMOTIONS

Types of Consumer PromotionsTypes of Consumer Promotions


• Refunds and Rebates – Marketers offer to return a certain amount of

money to the consumer who purchases the product (or coupon to encourage repeat use).

• Sampling– Allowing the consumer to try the product or

service (in-store, mailed, dentist office, newspaper).

CONSUMER PROMOTIONS



• Contests and Sweepstakes– Create excitement by promising “something for

nothing” and offering impressive prizes.– Contests are based on skill or ability; you

compete for prizes.– Sweepstakes are based on luck; send in your

name for a drawing.

• Specialties– Presents the brand’s name on something that is

given away as a reminder– Key chains, pens, calendars, tote bags, coffee

mugs.

CONSUMER PROMOTIONS



• Premiums– Tangible reward for a particular act– Work by adding value to the product

• Store premiums: given at retail site• In-pack premiums (in the package)• On-pack premiums (attached to package)• Container premiums (package is premium)

– Self-liquidating: mail payment with proof of purchase

CONSUMER PROMOTIONS



• Awareness– McDonalds “movie” toys

• Trial – Get the right people involved with the product through

sampling, price deals, coupons, refunds, rebates

• Maintain/increase market share– Convince people to switch– Price deals work with low-loyalty products– Characters on premiums associate the brand with the

character

• Brand reminder– Remind customers of positive experience with ad copy,

specialty items, thank you gifts

CONSUMER PROMOTIONS

How to Use Consumer PromotionsHow to Use Consumer Promotions


• Trade—all those involved in the channel of distribution including buyers, brokers, distributors, wholesalers.

• Marketers try to get the “trade” involved in promotions to make their marketing effort effective.

• Trade promotions give channel members information about products and their selling points to encourage them to provide shelf space and push products.

TRADE PROMOTIONS

What are trade promotions?What are trade promotions?


• Point-of-Purchase Display (POP)– Manufacturers design and distribute displays

to retailers to draw attention to their products.

– Racks, display cartons, banners, signs, moving parts, lights, action.

• Retail (Dealer) Kits– Materials that support retailer’s selling efforts

or help representatives make sales calls on prospective retailing customers.

– Product spec sheets, ad slicks/discs.

TRADE PROMOTIONS

Types of Trade PromotionsTypes of Trade Promotions


• Trade Incentives and Deals– When a manufacturer gives sellers a financial

reward for purchasing a certain amount of product or supporting a promotion.

– Includes special displays, extra purchases, superior store locations, more local promotion.

– Retailers get special discounts, free goods, gifts, cash from manufacturer.

– Advertising allowances: deals on coop advertising and deals for using promotional displays.

TRADE PROMOTIONS



• Contests– Advertisers can develop contests and

sweepstakes to motivate resellers.– Contests are far more common than

sweepstakes because they can be more closely tied to product sales (exceeds the quota by the greatest percentage, win the contest).

• Trade Shows and Exhibits– When companies in the same industry gather

to present and sell their merchandise and demonstrate their products.

TRADE PROMOTIONS



• The two primary roles for a trade promotion:– Stimulating in-store merchandising or other trade

support.

– Creating excitement among those responsible for selling the product.

• Trade promotions are also used to:– Manipulate wholesalers’ and retailers’ inventory

levels.

– Expand product distribution to new geographic areas or classes of trade.

TRADE PROMOTIONS

How to Use Trade PromotionsHow to Use Trade Promotions


• Manipulate Demand– Pull strategies: creating or increasing customer

demand so product is “pulled” through the channel.– Push Strategies: give channel members reasons to

carry products or give them better shelf space so product is “pushed” through the channel.

• Attention– POPs get attention and stimulate impulse purchases

• Motivation– Contests, trade deals, and other incentives motivate

trade/channel members to make sales.• Information

– Trade show displays give information about products, allow companies to gather and compare products.

TRADE PROMOTIONS

How to Use Trade PromotionsHow to Use Trade Promotions


• Promotions that cross over to other areas of marketing and blur the lines between promotion, advertising, and public relations– Sponsorships– Event marketing– Interactive and Internet promotions– Loyalty programs– Comarketing/partnership promotions

CROSSOVER PROMOTIONS

What are crossover promotions?What are crossover promotions?


• Sponsorships are when companies support an event, say a sporting event, concert, or charity either financially or by donating supplies and services.

• Event marketing means building a product’s marketing program around a sponsored event, such as the Olympics or a golf tournament.


Sponsorships and Event MarketingSponsorships and Event Marketing


• Blimps, balloons, inflatables, and skywriting planes capture attention and create excitement at events.– Goodyear Blimp

– Met Life’s Snoopy blimps

– Inflatable Spiderman to promote the movie

• Internet sweepstakes• Internet coupons


Other Promotional SupportOther Promotional Support


• Also called a continuity or frequency program

• A promotion to increase customer retention• Frequent flyers programs, TGI Friday’s

“Frequent Fridays”• These programs also capture information to

use for more targeted promotions and advertising.


Loyalty ProgramsLoyalty Programs


• Comarketing involves manufacturers developing marketing communication programs with their main retail accounts, instead of for them.

• Cobranding occurs when two companies come together to offer a product (e.g., American Airlines, Citibank Visa).

• With licensing, one company gives another company the right to use its legally protected trademarks and logos on products and in advertising or promotion.

• Tie-ins are when two companies are displayed, advertised, or promoted together to multiply impact (e.g., McDonald’s Shrek Happy Meals).


Partnership ProgramsPartnership Programs


• Introduce a new product

• Create brand awareness

• Brand building– Create affinity between brands and buyers– Create brand involvement through

positive associations

PROMOTION STRATEGY

Promotion ObjectivesPromotion Objectives


• Brand building is long-term and focused on the brand’s core values, while promotion is short term and price-focused.

• Critics say price promotions can undermine the brand’s established values and erode customer brand loyalty.

• Proponents say promotion can help build brand image.

• The solution: advertising must be more accountable and promotion more brand-focused; and they must work together.

PROMOTION STRATEGY

The Issue of Brand BuildingThe Issue of Brand Building


• Advertising and promotion have different strengths that, when combined with other marketing communication tools, can effectively accomplish objectives.

• Both seek to increase the number of customers and usage of the product by existing customers.

PROMOTION STRATEGY

Promotion IntegrationPromotion Integration

Advertising• Creates a brand image over time• Relies on emotional appeals• Adds tangible value to product

or service through image• Contributes moderately to short-

term profitability

Promotion• Creates immediate action• Added value strategies rely on

rational appeals; impulse appeals use emotion

• Adds tangible value to product or service

• Contributes greatly to short-term profitability


• Effectiveness is measured by volume, response rates, and redemption (coupons, refunds, rebates) rates.

• Payout planning seeks to produce promotions that increase sales and profits.

• Promotions can deliver sales but they must be well planned and executed in order to enhance the brand’s reputation.

PROMOTION STRATEGY

Promotion EffectivenessPromotion Effectiveness


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Copyright © 2009 Pearson Education, Inc. Copyright © 2009 Pearson Education, Inc. Publishing as Prentice HallPublishing as Prentice Hall

Prentice Hall, © 200916-1 Sales Promotion, Events, and Sponsorships Part 5: Principles: How to Win...

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