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Sales Promotion
Chapter 18
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Ch 18: Sales Promotion 2
Sales Promotion
• Using incentives to create a perception of greater brand value
• Consumer Market– Induce household consumers to purchase a firm’s
brand
• Trade-Market– Motivate distributors, wholesalers, and retailers to
stock and feature a brand
• Business Buyer– Cultivate buyers in large corporations who make
purchase decisions
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Ch 18: Sales Promotion 3
Sales Promotion Examples
Coupons
Price-off deals
Premiums
Contests
Sampling
Sweepstakes
Brand placements
Incentives
Loyalty Programs
Trade Shows
AllowancesGift Cards
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Ch 18: Sales Promotion 4
Importance of Sales Promotion
• $100 billion in 2000• Growth rate: 9 – 12 percent• Reasons for growth:
– Demand for accountability– Short-term orientation– Consumer response to promotions– Proliferation of brands– Increased power of retailers– Media clutter
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Ch 18: Sales Promotion 5
Objectives for Consumer-Market Sales Promotion
1. Stimulate trial purchase
2. Stimulate repeat purchases
3. Stimulate larger purchases
4. Introduce a new brand
5. Combat or disrupt competitors
6. Contribute to IMC
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Ch 18: Sales Promotion 6
Consumer-Market Sales Promotion Techniques
1. Coupons 2. Price-off deals
3. Premiums 4. Contests/sweeps
5. Samples & trials 6. Phone gift cards
7. Brand placements 8. Rebates
9. Frequency programs
10.Event sponsorship
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Coupons are the most widely used form of consumer sales promotion
Coupons are the most widely used form of consumer sales promotion
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Ch 18: Sales Promotion 8
Coupons
• Entitles a buyer to a price reduction for a product or service
• Advantages– Give a discount to price sensitive
consumer while selling product at full price to others
– Induce brand switching– Timing and distribution can be controlled– Stimulates repeat purchases– Gets regular users to trade up within a
brand array
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Ch 18: Sales Promotion 9
Coupons
• Disadvantages– Time of redemption cannot be
controlled– No way to prevent current customers
from redeeming coupons– Coupon programs require costly
administration– Fraud is a serious, chronic problem
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Ch 18: Sales Promotion 10
Price-Off Deals• Offers consumer reduced price at
point of purchase through specially marked packages
• Advantages– Controllable by manufacturer– Can effect positive price comparisons– Consumers believe it increases value
of a known brand
• Disadvantage– Retailers believe it creates inventory
and pricing problems
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Ch 18: Sales Promotion 11
Premiums and Advertising Specialties
• Premiums: free or at a reduced price with another purchase
• Free premiums provide item at no cost
• Self-liquidating premiums require consumers to pay most of the cost of the item
• Advertising specialties:– A message placed on a free, useful
item
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Premiums attract attention to a brand and offer the consumer something for free
Premiums attract attention to a brand and offer the consumer something for free
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Ch 18: Sales Promotion 13
Contests and Sweepstakes• Contests: consumers compete for prizes
based on skill or ability.• Sweepstakes: winners picked by chance• Both create excitement and interest • But . . .
– Legal and regulatory requirements are complex
– Consumers may focus on the game rather than the brand
– Difficult to get an IBP message across in a game
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Ch 18: Sales Promotion 14
Samples and Trial Offers• Sampling: Giving consumer an
opportunity to use a brand on a trial basis with little or no risk
• Types of sampling– In-store Newspaper– Door-to-door On-package– Mail Mobile
• Trial offers– Used for more expensive items– Consumer tries product for a fixed time
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Ch 18: Sales Promotion 15
Phone and Gift Cards• Manufacturers offer either for free
or for purchase debit cards– with phone time– or preset spending limits
• Examples include offers from Lexus, Oldsmobile, and The Gap.
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Ch 18: Sales Promotion 16
Rebates• Money back offer requiring the buyer to
mail a request for money back from the manufacturer
• Often tied to multiple purchases• Many consumers fail to bother sending
the request
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Ch 18: Sales Promotion 17
Frequency Programs
• Also known as continuity programs
• Offers customers discounts or free products for repeat patronage
• Common in airline, travel, and restaurant businesses
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Ch 18: Sales Promotion 18
Event sponsorship
• When a firm sponsors or cosponsors an event, the brand gains credibility with the event audience
• Now the fourth most popular form of promotion in U.S.
• Most preferred venue: sporting events
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Sales Promotion Directed at Trade and Business Buyers
• Objectives:Use a “push” strategy: Push the product into the distribution channel to the consumer– Obtain initial distribution– Increase order size– Encourage cooperation with consumer
market sales promotions– Increase store traffic
Ch 18: Sales Promotion 19
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Ch 18: Sales Promotion 20
Trade-Market Sales Promotion Techniques
• Point-of-purchase displays• Incentives: Push money
• Allowances: Merchandise allowances, slotting fees, bill-back allowances, off-invoice allowances
• Sales Training Programs• Cooperative (Co-Op) Advertising
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Ch 18: Sales Promotion 21
Business Market Sales Promotion Techniques
• Trade Shows• Business gifts• Premiums and advertising specialties• Trial offers• Frequency programs
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Trial offers are very effective in the business market. Why?
Trial offers are very effective in the business market. Why?
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Ch 18: Sales Promotion 23
Sales Promotion, the Internet, and New Media
• Big tech companies give away their products
• Sampling removes risk associated with consumer trial
• Internet firms use incentives to make Web sites “sticky”
• Internet is used to implement sales promotions
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Ch 18: Sales Promotion 24
Risks of Sales Promotion
• Create a price orientation
• Borrow from future sales
• Alienate consumers
• Time and expense
• Legal considerations
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Ch 18: Sales Promotion 25
Coordination Challenge
• Message coordination
• Media coordination
• Research conclusions-Short term effects can be dramatic-Short term effects are often not profitable-Rare for long-term effects to occur-Most power effects result from advertising and sales promotion being used together