ADVERTISING:

Sales Promotion

Sales Promotion

• A special incentive to:

– Distributors

– Salespeople, or

– Customers

• to encourage an immediate sale

Growth of Sales Promotion

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

'89 ‘90 ‘91 ‘92 '93 '94 '95 '96 '97 '98 '99 ‘00

Consumer Promotions

Media Advertising

Trade Promotions

Percent of Total Promotional Dollars, 3-year Moving Average.Percent of Total Promotional Dollars, 3-year Moving Average.

Consumer Promotions Use

• Franchise Building– LONG TERM preferences– Communicate distinctive brand identity– Example:

• “Frequency” programs with brand or store image

• Non-Franchise Building– IMMEDIATE sales– Examples:

Price-off dealsBonus packsRebates or refunds

Types of Promotions

• Obtaining trials

• Increasing repurchase

• Increasing overall consumption

• Rewarding current customers

• Reaching out to a new market

• Enhancing advertising efforts

Objectives of Sales Promotions

Sales Promotion Vehicles

Consumer-Oriented “Pull”

Samples

Coupons

Premiums

Contests/sweepstakes

Refunds/rebates

Bonus packs

Price-offs

Event sponsorship

Trade-Oriented “Push”

Contests, dealer incentives

Trade allowances

Point-of-purchase displays

Dealer premiums

Trade shows

Cooperative advertising

Sampling

The Products Are of Relatively Low Unit Value,

So Samples Don’t Cost Much

The Products Are of Relatively Low Unit Value,

So Samples Don’t Cost Much

The Products Are Divisible and Can

Be Broken Into Small Sizes That Can Reflect the

Products Features and Benefits

The Products Are Divisible and Can

Be Broken Into Small Sizes That Can Reflect the

Products Features and Benefits

The Purchase Cycle Is

Relatively Short So the

Consumer Can Purchase in a

Relatively Short Time Period

The Purchase Cycle Is

Relatively Short So the

Consumer Can Purchase in a

Relatively Short Time Period

The Products Are of Relatively Low Unit Value,

So Samples Don’t Cost Much

The Products Are of Relatively Low Unit Value,

So Samples Don’t Cost Much

The Products Are Divisible and Can

Be Broken Into Small Sizes That Can Reflect the

Products Features and Benefits

The Products Are Divisible and Can

Be Broken Into Small Sizes That Can Reflect the

Products Features and Benefits

Sampling Works Best When

Sampling Works Best When

Samples -- Media

• Door-to-door

• Direct mail

• In-store sample pack

• Cross-product sampling

• Co-op package distribution

• With newspaper / magazine

• Any of above with coupon

Display CardsDisplay Cards

Coupons

Advantage

• Works – will increase sales

Disadvantages

• May be redeemed by loyal users who would buy anyway

• Sometimes difficult to estimate redemption levels in advance

• Expensive

43%

35%

29%

25%

24%

20%

12%

11%

8%

7%

2%Gum

Candy

Carbonated Beverages

Adult Cold Remedies

Pet Food

Coffee

Sanitary Protection

Deodorants

Liquid Detergents

Ready-to-Eat Cereal

Disposable Diapers

Percent of Sales with Coupons

ADVANTAGES:

• Gets consumer involved with the product

• Generates interest and attracts attention to advertising

DISADVANTAGES

• May overshadow the product

• May detract from brand image

Sweepstakes and Contests

How much is spent (billions)

5.00

1.75

2.50

4.704.203.70

3.302.80

2.10

$0

$1

$2

$3

$4

$5

$6

88 89 90 91 92 93 94 95 96

Where it is spent

10%

8%6%

67%

9%

Sports MusicFestivals Cause Mktg.Arts

Spending on Event Sponsorship

Benefits of Event Marketing

1. Greater Awareness

2. Associate Product with Event

3. New Potential Clients (Sales)

4. Media Coverage

Competition

ContinuePromotions

ContinuePromotions

ReducePromotions

ReducePromotions

Our Firm

Lose market share

low profits

Maintain share

low profits

Higher profits for everyone!

Gain market share But low profits

The Sales Promotion Trap

Quote of the day

If you’re selling an inexpensive

product that is purchased

regularly, and it’s really great,

just give away free samples.

Mike BasilProfessor of Marketing