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Chapter 8Sales Promotion

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Sales Promotion

“Activity that provides special incentives to encourage immediate response from customers, distributors, and an organization’s sales force.”

ConsumerPromotionConsumerPromotion

TradePromotion

TradePromotion

Incentives to stimulate purchase or loyalty.

Incentives to encourage purchase and merchandising support by distributors.

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Push and Pull Strategies

MarketerMarketer WholesalerWholesaler RetailerRetailer ConsumerConsumer

Pull

Push

A combination of push and pull works best!

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Sales Promotion Planning

“Developing a plan of action for communicating incentives to designated targets.”

Promotion plans are often devised by external specialists who are briefed on the assignment.

• Market Profile

• Competitive Activity

• Target Market Profile

• Promotion Objectives

• Budget

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Sales Promotion Plans

Marketing PlanMarketing Plan

Sales PromotionPlan

ObjectivesStrategies

Tactics

Sales PromotionPlan

ObjectivesStrategies

Tactics

FulfillmentFulfillment EvaluationEvaluation

AdvertisingStrategy

AdvertisingStrategy

Other IMCPlans

Other IMCPlans

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Sales Promotion Objectives

ConsumerPromotionConsumerPromotion

TradePromotion

TradePromotion

• Trial Purchase

• Repeat Purchases

• Brand Loyalty

• Listings

• Sales Increases

• Merchandising Support

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Sales Promotion Strategy

Promotion strategy involves selecting the right combination of consumer promotions and trade promotions to achieve the marketing objectives.

Strategy = Consumer Promotion + Trade Promotion + Advertising Strategy

Advertising is essential to create awareness and interest in the sales promotion.

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Logistics and Fulfillment

1. Involves decisions about dates, deadlines, and details.

2. A promotion must run seamlessly from the front-end (announcing the promotion) to the back-end (delivering prizes or merchandise to recipients).

3. Fulfillment is often outsourced to a specialist.

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Measurement and Evaluation

Some typical yardsticks include:

• Sales increases in promotion period

• Trial and Loyalty (research may be necessary)

• Number of entries in a contest

• Redemption rates

• Financial Payout

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Consumer Promotion Execution

CouponsCoupons• Media delivery

• Product delivery

• In-store delivery

• Cross-product deliveryA price-saving incentive to trigger new or repeat purchases.

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Consumer Promotion Execution

FreeSamples

FreeSamples

• Regular size

• Trial size

• In-store taste samples

• On-site giveawayFree product to encourage trial purchase.

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Consumer Promotion Execution

ContestsContests•Sweepstakes

•Games Contests

•Instant Wins

Repeat purchase and loyalty-building incentives. They require advertising support to create interest.

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Consumer Promotion Execution

Cash Rebates

Cash Rebates

• Single Purchase Offers

• Multiple Purchase Offers

• Slippage Occurs

$ returned to consumers after purchase has been made.

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Consumer Promotion Execution

PremiumOffer

PremiumOffer

• In-pack

• Mail-in

• With purchase

• Product bundling

• Bonus packsAn item given free or at a discounted price with the purchase of a good.

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Consumer Promotion Execution

LoyaltyPrograms

LoyaltyPrograms

• Points programs

• Loyalty cards

• $ rewards

Incentives that encourage long-term loyalty; database management initiatives.

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Trade Promotion

A distributor’s loyalty to any supplier’s products is influenced by the quality and quantity of trade promotion offers.

Distributors make money by buying and re-selling goods. Inventory turnover is very important.

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Trade Promotion Execution

A variety of financial incentives are commonly offered to distributors.

TradeAllowance

TradeAllowance

PerformanceAllowancePerformanceAllowance

Cooperative AdvertisingCooperative Advertising

Temporary price reduction to stimulate larger purchases.

An additional allowance to encourage merchandising support.

An accumulating fund that supports retail advertising.

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Trade Promotion Execution

Some trade promotion incentives are controversial.

DealerPremium

DealerPremium

An incentive offered a distributor to encourage a “special” purchase. Often called “payola.”

SpiffSpiffRetail representatives are offered incentives to “push”

a sponsors product line.

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Trade Promotion Execution

Some trade promotions support the personal selling effort and in-store merchandising programs.

CollateralMaterialCollateralMaterial

Dealer DisplayMaterial

Dealer DisplayMaterial

Material used by sales reps in presentations (price lists, catalogues, brochures, CD-ROMs, etc.).

Point-of-purchase display material to encourage purchase (shelf pads, posters, displays, etc.).

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Planning the Promotion

Planning is crucial. Sales promotions are complimentary activities that must be integrated with other marketing and marketing communications programs.

1. How frequent should promotions be?

2. What effect will promotions have on brand image?

3. Will promotions enhance brand equity?

Tim Hortons RRRoll Up the Rim meets all of these considerations positively.

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In Class Assignment

1.What forms of sales promotion are best suited for the following brands – and why?Secret DeodorantQuaker Chewy Granola BarsNew Balance Running ShoesHewlett Packard laser printerAxe deodorant

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In class Assignment

2. Evaluate the sales promotion strategies used by Tim Hortons. What marketing objectives and marketing communications objectives do they meet? How does Tim Hortons integrate sales promotion with other components of the marketing communications mix?