Chapter 18 Sales Promotion Sales Promotion Using incentives
- Slides: 25
Chapter 18 Sales Promotion
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 Ch 18: Sales Promotion 2
Sales Promotion Examples Coupons Trade Shows Contests Gift Cards Allowances Sweepstakes Incentives Sampling Price-off deals Premiums Brand placements Loyalty Programs Ch 18: Sales Promotion 3
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 Ch 18: Sales Promotion 4
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 Ch 18: Sales Promotion 5
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 Ch 18: Sales Promotion 6
Coupons are the most widely used form of consumer sales promotion
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 Ch 18: Sales Promotion 8
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 Ch 18: Sales Promotion 9
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 Ch 18: Sales Promotion 10
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 Ch 18: Sales Promotion 11
Premiums attract attention to a brand offer the consumer something for free
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 Ch 18: Sales Promotion 13
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 – Door-to-door – Mail Newspaper On-package Mobile • Trial offers – Used for more expensive items – Consumer tries product for a fixed time Ch 18: Sales Promotion 14
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. Ch 18: Sales Promotion 15
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 Ch 18: Sales Promotion 16
Frequency Programs • Also known as continuity programs • Offers customers discounts or free products for repeat patronage • Common in airline, travel, and restaurant businesses Ch 18: Sales Promotion 17
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 Ch 18: Sales Promotion 18
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
Trade-Market Sales Promotion Techniques • Point-of-purchase displays • Incentives: Push money • Allowances: Merchandise allowances, slotting fees, billback allowances, off-invoice allowances • Sales Training Programs • Cooperative (Co-Op) Advertising Ch 18: Sales Promotion 20
Business Market Sales Promotion Techniques • • • Trade Shows Business gifts Premiums and advertising specialties Trial offers Frequency programs Ch 18: Sales Promotion 21
Trial offers are very effective in the business market. Why?
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 Ch 18: Sales Promotion 23
Risks of Sales Promotion • Create a price orientation • Borrow from future sales • Alienate consumers • Time and expense • Legal considerations Ch 18: Sales Promotion 24
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 Ch 18: Sales Promotion 25
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