copyright © 2012 pearson canada inc. chapter 13 sales promotion 13-1

Copyright © 2012 Pearson Canada Inc.

CHAPTER 13

Sales Promotion

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Learning Objectives

Identify the roles of various consumer and trade promotion activities in the marketing communications process

Outline the nature of various consumer and trade promotion activities

Assess the strategies for integrating sales promotions into the marketing communications mix

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Sales Promotion

Activity that provides special incentives to bring about immediate response from:

Consumers,

Distributors,

Organization’s sales force.

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Sales PromotionCan be subdivided into two main categories:

Consumer promotions stimulate consumer purchases (through coupons,

contests and other frequent-buyer programs). Help pull the product through the distribution channel

Trade Promotions Encourage distributors to purchase more volume and

provide additional merchandise support to stimulate consumer purchase.

Help push the product through the distribution channels

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Sales Promotion Planning

Today, Sales Promotions are not viewed as separate entities from advertising

Sales Promotions are planned at the same time to ensure synergies are achieved across all forms of communications.

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Sales Promotion Objectives

Promotion activity must complement the total marketing effort

Should be realistically achievable, measurable, highly focused, and capable of being evaluated and modified.

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Pull and PushPromotion Strategies

Pull: the organization creates demand by directing promotional efforts at consumers or final users of a product. Push: the organization creates product demand by directing promotional efforts at intermediaries, who in turn promote the product to consumers.

MarketerMarketer ConsumerConsumerWholesalerWholesaler RetailerRetailer

Pull

Push

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Consumer Promotion Planning

Pull Strategy pulls the product through the channel

MarketerMarketer DistributorsDistributors ConsumersConsumers

Objectives: Trial purchase Brand loyalty Multiple purchase

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Types of Consumer Promotion Activity

Coupons Free Samples Contests Cash Refunds Premium Offers Loyalty (Frequent-Buyer) Programs Delayed Payment Incentives Combination Offers

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Objectives of Coupon Programs

Non-brand users to make trail purchase Maintain current users Speed up acceptance of a new product Encourage current customers to repurchase

the brand (build loyalty) Attract users of competitive brands Encourage multiple purchases Increase seasonal sales

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Methods of Coupon Distribution

Coupons can be delivered to consumers in four different ways, by: Media

Product

In-Store

Digitally

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Free SamplesFree product distributed to potential users, effective for encouraging trial purchase.

In-store samples (most common)

Cross-sampling

Co-operative direct mail

Event sampling

Sample packs

Experiential (also called On-Site)

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ContestsContests are designed and implemented to create temporary excitement about a product.

Sweepstakes

Games / Instant Wins

Successful contests have significant media advertising support.

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Cash Refunds (Rebates)

Money returned directly to the consumer by the manufacturer after the purchase has been made.

Reinforce loyalty and multiple purchases

Slippage commonly occurs

Successful refund offers require strong P-O-P support

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Premium Offers

An item offered free or at a bargain price to encourage consumers to buy a specific product. It is usually offered three ways.

Mail-in

In/On Pack

Coupon Offer at P-O-P

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Loyalty (Frequent-Buyer) Programs

A frequent buyer program offers consumers a bonus, such as points or “play money.”

Canadian Tire Money

Frequent flyer programs Aeroplan / Airmiles

Safeway’s Club Card Encourage loyalty through repeat purchases

Generate data on purchase patterns, combinations

Allow for “price promotion” without undermining list price

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Delayed Payment IncentivesConsumers are granted a grace period during which no interest or principal are paid for the item purchased. Leon’s “Don’t Pay a Cent Event” Home Depot:

offers six-month and one-year interest-free financing on renovations and home repairs.

offers financing; By contrast independent contractors demand payment

when jobs are completed.

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Trade Promotion – Push Strategy

Pushes the product through the channel

ConsumersConsumersMarketerMarketer DistributorsDistributors

Objectives: Secure listings Build sales volume Secure merchandising support

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Trade Promotion Activity

Three basic objectives: secure a listing, build volume, and encourage merchandise support.

Trade Allowance

Performance Allowance

Co-operative Advertising Allowance

Continued…

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Trade Promotion Planning (cont.)

Retail In-Ad Coupons

Dealer Premiums

Collateral Material

Dealer Display Material (P-O-P)

Trade Shows

Branded Promotion Merchandise

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Sales Promotionand Media Strategy

A media mix is usually needed to achieve the communications goals of a promotion plan

The budget is spent in a concentrated period to generate high levels of awareness for the promotion.

Print Media Broadcast Media Online Media

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Sales Promotion Integration with Marketing Communications

Promotion strategies must be integrated with other marketing communications strategies. Strategic decisions must consider:

Frequency of Promotion Activity

Brand Image and promotions

Building brand equity

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copyright © 2012 pearson canada inc. chapter 13 sales promotion 13-1

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consumer promotions

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