Sales Promotion - Chapter 14

Sales Promotion Objective

Influence customer and potential customer behaviour, which may include an immediate purchase

What is a value-oriented incentive?

Extra amount of product, sample

Consumer sales Promotion

Designed to induce the consumer to purchase,

used by manufacturers and retailers

trade sales promotion

Designed to motivate organizations in the distribution channel to carry and merchandise a product, directed at intermediaries

Account-specific marketing

Development of customized promotional programs for individual retail accounts by marketers

What is the objective of trial purchase in consumer sales promotion?

To introduce new products to new users.

What is the objective of repeat purchase in consumer sales promotion?

To encourage customers to stock up using price promotions, coupons, or bonus packs.

What is the objective of consumption in consumer sales promotion?

To provide recipe books or calendars.

What is the objective of brand equity in consumer sales promotion?

To engage customers through contests, sweepstakes, and premiums.

Sales Promotion

Direct inducement within an action-focused marketing event that offers an extra value or incentive for the product to the salesforce, distributors, or the ultimate consumer

What is a financial incentive?

Coupon, price discount, refund or rebate

What is an emotionally based incentive?

Contest entry, premium

What is an experiential incentive?

Attend an event

Consumer franchise-building (CFB)

Communicate distinctive brand attributes and contribute to the development and reinforcement of brand identity

Non-franchise-building (non-FB)

Accelerate the purchase decision process and generate an immediate increase in sales but do little or nothing to communicate brand information, identity, and image

Incentive Characteristic of Sales Promotion

Provides consumers with an extra incentive or reward to influence their behaviour

Types of Sales Promotion Activities

- Trail Purchase

- Repeat purchase/Customer loading

- Support IMC program/Build Brand equity

Trial Purchase (immediate)

•Sampling

•Instant coupon

•In-store coupon

•In-store rebate

•Coupon sent by media, mail, scanner, Internet

•Mail-in refund and rebate

Trial Purchase (delayed)

•Free mail-in premium

Repeat purchase/ Customer loading (immediate)

•Price discount

•Bonus pack

•In- and on-package free premium

Repeat purchase/ Customer loading (delayed)

•In- and on-package coupon

•Mail-in refund/rebate

Support IMC program/ Build Brand Equity (immediate)

•Event

•In- and-on package free premium

Support IMC program/ Build Brand Equity (delayed)

•Self-liquidating premium

•Free mail-in premium

•Contest, sweepstakes

Operant Conditioning

learning theory that views the probability of a behaviour as being dependent on the outcomes or consequences associated with it

Shaping

reinforcement of successive acts that lead to a desired behaviour pattern or response

Sales Promotion for Product trial

Sample and large discount coupon given in-store

Sales Promotion for Purchase with low financial cost

Wide distribution of good discount coupon

Sales Promotion for Purchase with moderate cost

Modest discount on-pack coupon for next purchase

Sales Promotion for Purchase with full cost

No sales promotion

Sales promotion are run nationally or in select markets so need to consider:

1) Regional focus requires greater managerial commitment in planning and implementation

2) Achieving objectives more specifically may result in greater expense

3) National accounts may not be receptive

Value of Incentive

Depends on threshold at which consumers will respond and number of potential responses

Timing

Which months, weeks, days to offer promotion

Distribution

How will it get to consumers; how will they get it

Sampling

A variety of procedures whereby consumers are given some quantity of a product for not charge to trial

Packaged goods meet three criteria:

1) Relatively low unit value

2) Products are divisible; adequate for demonstrating brand's features and benefits

3) Purchase cycle is relatively short

Strengths of Sampling

- Stimulates trial

- Incentivizes brand switching

- Encourages consideration among non-category users

Limitations of Sampling

- Brand must have unique benefit to induce purchase

- Cost of sampling program is recovered only if program gets consumers to become regular users of brand

What is a direct sampling distribution method?

High absolute cost with people delivering, but cost-effective with accurate target audience selection via geographic location of residence.

What is a mail sampling distribution method?

Suitable for small products and uses direct geodemographic targeting.

What is a media sampling distribution method?

Print is used for small, flat items, while the internet is used for digital products.

What is a package sampling distribution method?

Minimizes cost for multi-product firms by attaching a new product sample to an existing brand's package, allowing for brand partnerships.

What is a store sampling distribution method?

Ideal for immediate experience products and requires trade acceptance and payment.

What is a location sampling distribution method?

A niche version of the store method to reach a specific target audience.

What is an event sampling distribution method?

Used at concerts, sporting events, cultural festivals, and brand's event marketing.

Coupons

Voucher providing a discount or free good

Strength of Coupons

- Appeal to price-sensitive consumer

- Offer price break without retailer cooperation

- Be effective way to induce trial

- Encourage purchase after initial trial

- Encourage trial by non-users of established brand

- Stimulate repeat purchase among current users

Premium

An offer of an item of merchandise or service either free or at a low price that is an extra incentive to purchasers

Self-liquidating premiums

Require the consumer to pay some or all of the cost of the premium plus handling and mailing costs

Embedded premium

brand donates money to a worthy social cause and contributes to strengthening the brand

Promotional products

useful and/or symbolic items that are implemented in marketing communication programs as a sales promotion or message vehicle, or a combination of both

Contest

consumers compete for prizes or money on the basis of skills or ability

Sweepstakes

Winners are determined purely by chance; it cannot require a proof of purchase as a condition for entry

Game

Chance element or odds of winning associated with it; include game card devices, longer period and more involvement

Refunds

offers by manufacturer to return a portion of the purchase price, usually after consumer supplies proof of purchase

Strengths of Refunds

- Induce trial to encourage brand switching or non-category

- Encourage repeat purchase (depends on size)

Limitations of Refunds

- Not all are motivated due to delay of offer

- Negative relationship between use of rebates and the difficulties of redemption process

- Consumers believe used for inferior products

Bonus packs

offer the consumer an extra amount at the regular price

Strengths of Bonus Packs

- Give marketers a direct way to provide extra value

- Obvious to consumer at time of purchase

- Due to the simplicity of presentation, consumers prefer a bonus pack

Limitations of Bonus Packs

- Usually requires additional shelf space without providing any extra profit margin to retailer

- May appeal primarily to current users who would have purchased the brand anyway OR to promotion-sensitive consumers who may not become loyal

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