Promotion – 1

Promotion

Professor Carl Mela

BA 460 Product Management

Fuqua School of Business

• Brand Management System

• On Building A Brand

• Managing Across Brands

Promotion – 2

Agenda

• Event Marketing

• Sales Promotion

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Event Marketing

• $3.7 BB business• Many companies have a separate department

for event marketing– Sporting Events– Music– Festivals– Causes– Arts– Self created events (Wall of Velcro)

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Event Marketing Provides Marketers With:

• Link to segment or lifestyle (4WD and skiing)

• Increased awareness (Dutch Boy ‘In the Paint’ basketball)

• Brand associations (Champion plugs and NASCAR)

• Enhance corporate image (prestige)

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Event Marketing Provides Marketers With:

• Signal of commitment to the community

• Entertain key clients (Iron Dukes)

• Create excitement for employees

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Event Marketing Risks

• Cannot control events– Recent football arrests and affect on brand

image– Ensure target audience is matched and

images favorable

• Payoff hard to measure– DDB Needham 22 of 37 olympic sponsors

created no connections in consumers minds.

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Sales Promotion

• Trade– Allowances, discounts, etc.

• Consumer– Coupons, etc.

• Incentive, as opposed to reason to buy

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Trade Promotions

• Used to obtain distribution and shelf facings / product placements.

• Used to create temporary price reductions to the consumer

• Used to control inventory levels (low or high)

• Talking point for sales force

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Consumer Promotions

• Franchise building (samples/message)

• Non-franchise building (price cuts)

• Induce trial

• Induce switching

• Induce stockpiling

• Defend against competitive promotions

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Critiques

• Short term orientation hurts brand

• Inventory and production volatility hurts brand

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Blattberg et al.

• Learning from supermarket scanner data– Temporary price cuts substantially increase sales– Higher share brands’ deals work better– More deals lead to a smaller sales spike– Retailers pass through less than 100%– Display and feature have huge effect– Deals affect store traffic - effect is small– Promotions affect sales in complementary categories.

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Blattberg et al.

• What we still do not know– Most of volume comes from switchers (short run)– Promotional elasticities exceed price elasticities– There is a post promotion dip– How much of deal effect is incremental– There is a negative long term effect of promotion

• New study I will be doing w/IRI data

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Summary

• Event Marketing– Ensure event is for proper target audience and

that associations are favorable

• Sales Promotions– Incentive, not reason, to purchase– Excessive use can damage your brands