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Why sales promotion? Advertising alone is not always enough to move products off store shelves to consumers Marketers use variety of sales promotion methods targeted at both consumers and wholesalers, retailers that distribute their products, to stimulate demand
Advertising & Sales promotion Advertising appeals to the mind and emotions to give the consumer a reason to buy Sales promotion appeals more to the pocket and provides an incentive to purchasing a brand
Sales promotion attempts to maximize sales volume by motivating customers who have not responded to advertising
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Trade allowance or discount gives retailers a financial incentive to stock and promote a manufacturers products Trade contest directed to wholesalers or retailers gives them an extra incentive to meet sales goals
Sales Promotion
A direct inducement that offers an extra value or incentive for the product to the sales force, distributors, or the ultimate consumer with the primary objective of creating an immediate sale.
Trade-Oriented
Contests, incentives
Trade allowances Point-of-purchase displays Training programs Trade shows Cooperative advertising
Reasons
Increased accountability
Competition Clutter
Short-term focus Sales promotion is seen as a way of generating an immediate increase in sales
Reasons for shift in allocations of budget Short-term focus Brand managers use sales promotion routinely to meet quarterly or yearly sales and market share goals
Increased accountability
Results from sales promotion programs are generally easier to measure than those from advertising Part of pay managers receive depends on sales generated through promotions
Reasons for shift in allocations of budget Competition Promotions are seen as way to gain a competitive advantage as markets for many products are mature and stagnant Clutter Promotional offers can break through the clutter and attract attention
Concerns Advertising informs consumers of a brands features and benefits, creates an image helps build and maintain brand loyalty
Brands may lose the equity that advertising helped create if forced to compete primarily on the basis of price
Do not communicate brands unique features or the benefits of using it E.g. price-off deals, bonus packs, rebates
Nonfranchise-Building Promotions
Objectives Accelerate the purchase decision process Generate an immediate sales increase
Limitations Do not identify unique brand features Do not contribute to brand identity or image
Nonfranchise-Building Promotions
May Include . . .
Price-off deals
Bonus packs
Rebates or refunds
Shortcomings
Customers may buy price rather than brand equity
Objectives
Techniques Sampling Couponing Premium Contests and sweepstakes Refunds and rebates Bonus packs Price-off deals
Sampling
Giving the consumer some quantity of the product at no charge to induce trial
The product can be broken into a small piece or size that reflects the full features and benefits
Sampling Methods
How the sample will be distributed to consumers
Door-to-door
Methods
Newspaper/magazine insert
Internet sites
Disadvantages
Hard to tell how many consumers use them and when Often used by loyal consumers who may purchase anyway Declining redemption rates and high costs of couponing Misredemption and fraud
Premiums
An offer of an item, merchandise, or service, free or at a low cost, that is an extra incentive for customers
Types of Premiums
Free: Only requires purchase of the product
(Free toys with McDonalds Happy meals)
Self-liquidating: Consumer required to pay some or all of the cost of the premium
Bonus packs
Event marketing
Objectives
Co-op Advertising
Trade allowances
POP displays
Sales training
Buying Promotional
Slotting
(introductory allowance)
Trade shows
Effective tools Consumer and trade promotions can be an effective tool for generating short-term increases in sales. This is an easier route to profitability than is building the brands image over time. When sales promotions become over used, they can be detrimental to a brand.
Concerns
Example: An over-promoted brand may lose perceived value.
Consumers who consistently purchase a brand because of a coupon of price-off deal may attribute their behavior to the promotional incentive, rather than to a (Attribution theory).
If a promotion is successful, competitors may copy it. Once everyone is using the sales promotion, profit margins fall, hard for any one firm to stop promotions (sales promotion trap).