Sales Promotion

1. Sales Promotion What is the difference between Promotion, Advertising, Publicity, and Personal Selling, Direct Marketing?

2. Advertising • paid communication from a company to the public. It communicates messages about a product, service or company that appears in mass media such as television, radio and magazines.

3. Personal Selling • direct communication between a company and consumers. It is usually done in person but sometimes over the phone.

4. Direct Marketing • direct communication between a company and an individual customer other than face-to-face personal selling.

5. Sales Promotion • short term incentive aimed at increasing the purchase of a product or service. Where advertising says “buy our product”, Sales promotion says “Buy it now!”

6. Publicity • publicity is a non-paid for positive or negative media coverage.

7. Public Relations • is an organized effort to present a positive image of the company or its products in non-advertising communications. Readers will believe a 3rd party more easily.

8. Types of Sales Promotions: • Coupons • Premiums • Contests • Sweepstakes • Sampling • Bonus pack • Rebate • Point of purchase (POP)

9. Contests and Sweepstakes • Award a prize to a select number of entrants • Contests are more skill based while sweepstakes are more luck based • Canadian law prohibits exchanging money for a chance to win a luck based game (This is primarily called gambling and is controlled by the provincial governments) • Companies get around this using a “skill” testing question • They also offer a “no purchase necessary” option for non-buyers. (There are usually barriers to this type of entrance though – mail in, fax in, fill out more forms, etc.) • By having the contest winner produce some sort of skill or knowledge, they can claim that the sweepstake is actually a contest

10. Contest/Sweepstakes continued… • Two fold purpose of contests: (1) Promote new or existing products, (2) gain customer information for company database • Key idea: People like to receive something for nothing • Used for both products and services – e.g., Visa is running a contest where you can get your monthly bill paid off by Visa. All you have to do is use your Visa card.

11. Contests don’t always work: Northwest Airlines offered the use of one of its jet for a round trip to Florida and 3 night’s accommodations for the winner of their contest and 92 of his/her friends. Unfortunately, winnings are taxable in the U.S. and the winner did not want to pay the taxes on the winnings. Northwest offered $15,000 to offset the loss; however, these winnings were taxable too. The winner forfeited the trip and decided to settle for a smaller cash prize.

12. Refunds and Rebates (Trial Offers) • Refund: return of the full amount of money tendered by the customer • Rebate: returns a portion of the money tendered by the customer • How are they used: Refunds – for trial offers ; Rebates – to promote the sale of other company products, or the sale of the purchase product

13. Examples: Rebates on Computer Hardware (Printers), website that gives you the best purchase price for items, services – cash back if not satisfied • Goal of: • Trial offers: let you try the product first hand – most people won’t go through the trouble of sending it back unless they are really unsatisfied. • Rebates: future sales – rebates on next item purchased • Both allow companies to generate mailing lists

14. Coupons • Document that grants the person a reduction in the price of a specific product or service (has a face value, but not a cash value) • Where do you obtain coupons from: • Newspapers (or any print) • On-line • Flyers (Mail) • At a store’s cash register/entrance • Displays in stores • Cash register receipts • Purchased coupon booklets

15. Coupons continued… • Redemption rate – number of coupons issued compared with the number of coupons used • What would affect the redemption rate? • Face value • Ease of use • Availability/knowledge of coupon

16. So many coupons – how to make yours stand out? • Put coupons right on product (buy and save immediately, future sales) – place where customers can find all the coupons redeemable in the store • Computerized cash registers that can check the bar codes of the purchases and print out coupons that apply to purchases (or similar purchases – e.g., a person buying a razors may get a coupon print out for shaving cream) • Example: Boston Pizza gave out fortune cookies to its customers when promoting their expansion into Taiwan. One in every ten cookies had a coupon for a free pizza or soft drink

17. Samples • Offering in whole or part a product or service to the customer free of charge • Good for promotion of new products or improved products • Better at point of purchase than in mail or delivery • Works well with other forms of promotion – e.g., sample a food at a grocery store and have coupons at the sample table so that customers get a deal on the purchase • Examples: Pepsi Taste Test (Market Research in form of survey – but also a sample), Costco (get an entire meal by walking around sampling products), Shoe cleaner, eye glasses cleaner (just soap), window cleaning (will clean one window)

18. Premiums and Self Liquidators • Promotions that allow people to acquire something by purchasing something else • Premiums: free product or service offered after purchase • Self-Liquidator: a product or service offered after purchase at a substantially reduced price

19. Premiums and Self Liquidators Examples • Liquor Store – get a small bottle of Jack Daniel’s when you purchase a big bottle of Bailey’s Irish Cream • Air Miles Cards, buy a coke and keep the mug, Coffee cards, store credit cards, skate sharpening (buy five get the sixth one free) • Good for advertising as many premium (giveaway items) are hats, shirts, bags, etc. with the company logo on it

20. Bonus Packs • When a product offers and increased quantity of said product • Toothpaste – get 25% more • Soap – buy five bars get the sixth one free • Services? (Rent our car for two days and the third day is free – don’t have to come back or make another purchase to use the day – like in a premium)