sales promotion chapter eleven. copyright ©2011 pearson education, inc., publishing as prentice...

Sales PromotionSales Promotion

Chapter ElevenChapter Eleven

Copyright ©2011 Pearson Education, Inc., Publishing as Prentice Hall 11-2

Key Learning PointsKey Learning Points

How sales promotion differs from How sales promotion differs from other modes of communicationother modes of communicationThe different types of sales The different types of sales promotionspromotionsDifferences between customer, trade, Differences between customer, trade, and retailer-oriented promotionsand retailer-oriented promotionsIssues in the development of Issues in the development of promotional strategy and objective-promotional strategy and objective-settingsettingAllocating money between Allocating money between advertising and sales promotionadvertising and sales promotion


Table 11.1Table 11.1Automobile Company Average Automobile Company Average

Sales Incentives in 2009Sales Incentives in 2009

Visit Edmunds.com


““Sales promotion is an Sales promotion is an action-focused marketing action-focused marketing event whose purpose is to event whose purpose is to have a direct impact on the have a direct impact on the behavior of the firmbehavior of the firm’’s s customers.”customers.”

- Robert C. Blattberg & Scott A. Neslin


Figure 11.1Figure 11.1Simplified Channel and Simplified Channel and Promotional StructurePromotional Structure


Table 11.2, Part ATable 11.2, Part ATypes of Consumer Types of Consumer

PromotionsPromotions

Sales Promotion

Price-oriented Price-oriented promotionspromotions

Couponing is Couponing is the dominant the dominant form of form of activity.activity.

Redemption is Redemption is low.low.


Table 11.4Table 11.4Where Coupons are Where Coupons are

DistributedDistributed


Marketing ResearchMarketing Research

Methods of Coupon DistributionMethods of Coupon Distribution

Free-standing Free-standing insertsinsertsROP newspaperROP newspaperSunday Sunday supplementssupplementsMagazineMagazineDirect mailDirect mail

On-packageOn-packageInstantly Instantly redeemableredeemableIn-packageIn-packageCross-ruffCross-ruffRetailer couponsRetailer couponsCoupon machinesCoupon machines


Table 11.5Table 11.5Couponing ObjectivesCouponing Objectives

Discussion

E-coupons are gaining in E-coupons are gaining in popularity. Visit one of the web popularity. Visit one of the web sites below to learn more. sites below to learn more.

www.thecouponclippers.comwww.coolsavings.comwww.coupondispatch.com

What advantages do e-coupons What advantages do e-coupons offer compared to traditional offer compared to traditional coupons?coupons?

Sales Promotions

Types of price-oriented promotions:Types of price-oriented promotions:CouponsCoupons

Price, value, or bonus packsPrice, value, or bonus packs

Refunds, rebates and money-back offersRefunds, rebates and money-back offers

Interest rate promotionsInterest rate promotions

In-store discountsIn-store discounts

Price-oriented promotions can have Price-oriented promotions can have negative effects on consumer negative effects on consumer behavior.behavior.

Sales Promotions

Product-oriented promotions give away either the product itself or a closely related product.

Sampling is commonly used for new products.

Sales Promotion

Product-oriented promotionsPremiums: Free merchandise provided with purchase or with fee and proofs of purchase

Sales Promotions

Special event promotions:Special event promotions:Contests and sweepstakesContests and sweepstakes

Tie-ins to sporting events and Tie-ins to sporting events and moviesmovies


Table 11.2, Part BTable 11.2, Part BTypes of Trade PromotionsTypes of Trade Promotions


Price-Based Trade PromotionsPrice-Based Trade Promotions

Provide retailers with an incentive Provide retailers with an incentive to carry the product.to carry the product.

Often used when manufacturers Often used when manufacturers want retailers to pass on savings to want retailers to pass on savings to buyers.buyers.

Instead, many companies engage in Instead, many companies engage in forward buying practices.forward buying practices.

Sales Promotions


Table 11.2, Part CTable 11.2, Part CTypes of Retailer PromotionsTypes of Retailer Promotions


IllustrationIllustration

Point-of-purchase displays include Point-of-purchase displays include information and other company-paid information and other company-paid advertising.advertising.

End of aisle displays or endcaps are End of aisle displays or endcaps are a popular form of retailer promotion.a popular form of retailer promotion.

Promotion Strategy, Objectives and Evaluation

Consumer-oriented promotions:Consumer-oriented promotions:Strategic issuesStrategic issues

Effect on new productsEffect on new products

Effect on existing brandsEffect on existing brands

Promotional dilemmaPromotional dilemma

Cost and benefits must be Cost and benefits must be consideredconsidered


Table 11.6Table 11.6Consumer Promotion Consumer Promotion

ObjectivesObjectives


Figure 11.4Figure 11.4Evaluating Sales Promotions:Evaluating Sales Promotions:

Tracking StudiesTracking Studies


Incremental Effects of Incremental Effects of Price PromotionsPrice Promotions

Accelerated regular purchasesAccelerated regular purchases

Accelerated captured purchasesAccelerated captured purchases

Unaccelerated regular purchasesUnaccelerated regular purchases

Unaccelerated captured Unaccelerated captured purchasespurchases

Promotion Strategy, Objectives and Evaluation


Figure 11.5Figure 11.5Strategies for Trade DealingStrategies for Trade Dealing


Table 11.7Table 11.7 Objectives of Trade DealsObjectives of Trade Deals


Table 11.8Table 11.8Sales Promotion PlanSales Promotion Plan



Proctor & Gamble created the Proctor & Gamble created the following sales promotion plan for a following sales promotion plan for a new consumer goods product.new consumer goods product.

Trade allowancesTrade allowancesSamplingSamplingCouponingCouponingSpecial promotionsSpecial promotionsRefundsRefundsPremiumsPremiums

Sweepstakes and contestsSweepstakes and contests


Promotion Strategy, Promotion Strategy, Objectives & EvaluationObjectives & EvaluationEvaluating trade promotionsEvaluating trade promotions

Evaluation typically uses tracking of Evaluation typically uses tracking of before-and-after results.before-and-after results.

The frequency with which deals are The frequency with which deals are passed-through should also be passed-through should also be considered.considered.


Table 11.9Table 11.9Sales Effect of Deal Discount, Sales Effect of Deal Discount,

Feature Advertising, and DisplaysFeature Advertising, and Displays

Activity

Suppose that you were the Suppose that you were the marketing manager responsible marketing manager responsible for introducing a new brand of for introducing a new brand of snack food. Describe the types snack food. Describe the types of consumer and trade sales of consumer and trade sales promotions that you would use promotions that you would use to introduce the product. to introduce the product.


Promotion BudgetingPromotion Budgeting

Budgeting follows the same Budgeting follows the same approaches discussed for approaches discussed for setting ad objectives.setting ad objectives.

Select method of budgeting.Select method of budgeting.

Determine overall advertising and Determine overall advertising and promotion budget.promotion budget.

Determine amount to be spent on Determine amount to be spent on promotion.promotion.


Conditions Affecting Total Conditions Affecting Total Budget for Advertising and Budget for Advertising and

PromotionsPromotionsStandardized Standardized productproduct

Many end-usersMany end-users

Small purchase Small purchase amountamount

Channel members Channel members make salesmake sales

Sales Promotions

Premium-priced Premium-priced productproduct

High contribution High contribution marginmargin

Small market Small market shareshare



Several factors influence the Several factors influence the allocation of money between allocation of money between advertising and promotion.advertising and promotion.

The total amount of resourcesThe total amount of resourcesCustomer factorsCustomer factors


Consumer Franchise BuildingConsumer Franchise Building

CFB ratio =(CFB$ + non-CFB$)

CFB $

* CFB activities are those that build brand equity.* Non-CFB activities focus on price alone.


Sales Promotion and Sales Promotion and Information TechnologyInformation Technology

In-store information technology



The marketing manager for the The marketing manager for the number two brand of peanut number two brand of peanut butter could take several steps butter could take several steps to increase market share.to increase market share.

Users of #1 brand receive high Users of #1 brand receive high value coupon.value coupon.Redeemed coupons of #1 brand Redeemed coupons of #1 brand generate repeat purchase coupon.generate repeat purchase coupon.Complimentary purchases Complimentary purchases generate medium value coupon.generate medium value coupon.Checkout Direct program is Checkout Direct program is implemented.implemented.


Discussion QuestionsDiscussion Questions

1.1. Which promotion techniques are most appropriate Which promotion techniques are most appropriate for charities that do not sell merchandise?for charities that do not sell merchandise?

2.2. Given that most charities operate with very limited Given that most charities operate with very limited budgets, which techniques could realistically be budgets, which techniques could realistically be used by those that do sell merchandise?used by those that do sell merchandise?

Sales promotions can be used in the marketing of Sales promotions can be used in the marketing of services and not-for-profit organizations as well as in services and not-for-profit organizations as well as in consumer goods marketing. consumer goods marketing.

While some charitable organizations sell merchandise, While some charitable organizations sell merchandise, most use marketing to solicit donations or volunteers.most use marketing to solicit donations or volunteers.


Executive SummaryExecutive Summary

Sales promotion is short-term oriented.Sales promotion is short-term oriented.Three kinds of promotions exist.Three kinds of promotions exist.Customer promotions are often price-Customer promotions are often price-related.related.Trade promotions provide incentives to Trade promotions provide incentives to channel members.channel members.Retailer promotions involve both price Retailer promotions involve both price and special displays.and special displays.Evaluating sales promotions is Evaluating sales promotions is important.important.Promotions are being run on the Web.Promotions are being run on the Web.

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