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Chapter Sixteen

Sales Promotion: Intensifying Consideration. Key Points: How do sales promotions add value to a brand offering? What are consumer sales promotions designed to accomplish and what are their strengths and limitations? How do trade promotions work?. Chapter. Chapter Sixteen. 16.

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Chapter Sixteen

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  1. Sales Promotion: Intensifying Consideration Key Points: How do sales promotions add value to a brand offering? What are consumer sales promotions designed to accomplish and what are their strengths and limitations? How do trade promotions work? Chapter Chapter Sixteen 16

  2. Intensifying the Brand Message Sales promotion is a marketing communication function that adds value to brand messages. It intensifies a brand contact when a customer or prospect is in the critical “buy zone”. Sales promotion’s primary job is to impact behavior. Sales promotions are mostly nonpersonal, one-way messages. These types of brand messages are highly persuasive because they provide tangible added value and are available for only a limited time, which can create a sense of urgency. Chapter Perspective

  3. Sales Promotion:The Value-Added Function Sales promotion is a short-term, added-value offer designed to encourage and accelerate a response. A consumer sales promotion offer is designed for end users or buyers. A trade sales promotion offer is designed for customers in the distribution channel.

  4. Consumer Sales Promotion Tools There are many sales promotion tools used in consumer promotion: • Coupons • Price reductions • Rebates • Premiums • Specialties • Sampling • Sweepstakes and contests • Tie-in promotions • Loyalty promotions

  5. Figure 16-1, p.570 Allocation Of Consumer Advertising And Sales Promotion Dollars In 2000

  6. Exhibit 16-5, p.570 Dr. Pepper

  7. How Sales Promotion Works Marketers use two basic sales promotion strategies: • Push strategies • Pull strategies Most sales promotion programs include both push and pull strategies, using both consumer and trade promotions.

  8. Exhibit 16-6, p.571 Maybelline Hydra-Time

  9. Loyalty or Disloyalty? • Promotions to reward Loyalists • Promotions to encourage Brand-Switching

  10. Loyalty Programs: The Retention Driver A loyalty program is a strategy for minimizing customer defections and increasing a brand’s share of wallet. These programs work best when brands have high fixed costs and low variable costs. See next slide:

  11. The primary benefit or strength is an increased level of customer retention. Other loyalty program strengths include: It can be an excellent vehicle for collection database information. It can also differentiate a brand. Loyalty Program Strengths

  12. Despite its strengths, loyalty programs have several limitations: Loyalty programs can over-shadow a brand. These programs can take more resources to manage and administer than other forms of marketing communication used by the brand. It it is difficult to determine whether such programs are truly cost-effective. Loyalty Program Limitations

  13. Media of Consumer Sales Promotion Businesses use every type of medium to deliver brand messages to consumer and trade audiences. Every sales promotion needs a vehicle to carry it.

  14. Free Samples:

  15. Exhibit 16-14, p.584 Sprint

  16. Rebates Increasing What are the advantages of using rebates vs. other promotional pricing methods? • Makes products look cheaper • Gives price-cutting control to manufacturers • Can be rolled out and shut off quickly • Gets consumers’ attention...

  17. What’s the deal here?

  18. Rebate “Secrets” • 76% of packaged-goods companies used money-back offers in 1996 • Redemption rate is only 5-10% for offers up to $10.00 • Redemption rate is only up to 20% for $20.00 offers

  19. Downside of Rebates • Consumer resentment • Possible damage to company image

  20. In terms of the marketing program, sales promotion programs are designed to: Increase distribution Balance demand Control inventory Respond to competitive programs Strengths ofConsumer Sales Promotion

  21. Companies also use sales promotion to achieve certain MC objectives such as: Encourage trial Increase frequency and/or quantity of purchases Build customer databases and relationships Reward and retain customers Cross-sell Extend the use of a brand Reinforce the brand image Strengths ofConsumer Sales Promotion

  22. Limitations ofConsumer Sales Promotions • Sales promotion has a questionable image. • Some marketers feel that it is simply a way to buy sales as opposed to convincing people a brand is a good value. • Sales promotion is sometimes criticized for primarily attracting those who are only searching for the best deal, not a long-term brand relationship. • Competitors may soon follow, which negates the added-value advantage and adds another cost of doing business. • The overuse of promotional offers may negatively reposition the brand.

  23. Trade-Oriented Promotions

  24. Trade and BtB Promotions Trade promotions are important in gaining the support of a brand by members of the distribution channel. By law trade promotions must be offered on an equal basis to all dealers and resellers who compete against each other.

  25. Trade Promotion Objectives Trade promotions are used to motivate certain types of actions by channel members such as: • Obtain or increase distribution of a brand • Have the brand featured in the store’s advertising • Expand amount of shelf display and/or get temporary off-shelf display

  26. Types of Trade Promotion Trade promotion tactics include: • Slotting allowances • Off-invoice allowances • Advertising/Promotion allowances • Cooperative advertising allowances • Buy-back allowances • Dealer contests • Dealer loaders

  27. Trade-Oriented Promotions • Contests / Dealer Incentives • Push Money / “Spiffs” These types of promo’s often referred to as “Non-Franchise Building” -WHY? • Consumer Franchise-Building vs. • Non-Franchise Building

  28. Trade-Oriented Promotions • Not so clear that they’re always NFB… • Stihl Chainsaw Example

  29. Sampling (Free) • Door-to-Door / Direct Mail • In-Store / On-Package • Known to be effective through Learning Effects • Reciprocity also highly likely...

  30. Couponing / Frequency Marketing • Direct Mail / Handout / Electronic / Newspaper / Magazine / In-Pack / On-Pack • Show coupon clip • What’s happening with coupons? • VIDEO CLIP • Redemption Rates are down • However, still very effective

  31. Problems with Coupons • Costly (2-3X face value to redeem) • Too many of them • Consumers becoming dependent on them • Poor Targeting (waste) • Enter some solutions

  32. New “Solutions” to Coupons • Eliminate them • Cut down on waste by improving targeting • Catalina Coupons

  33. Catalina Coupons • Available at Schnuck’s in Columbia • Sport-Drink Story

  34. AVOID Use of Confusing Promotions!

  35. Electronics Boutique - Videogame Trade-up offer.

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