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Sales Promotions

Date post:20-Aug-2015
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  1. 1. Sales Promotions Sales promotion spurs action and must complement advertising
  2. 2. Sales Promotion
    • Anextraincentive to buy
    • Anaccelerationtool
    • Targeted todifferentparties
    • An inducement tointermediaries
    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.
  3. 3. Reasons for Increase in Sales Promotion
    • Growing Power of Retailers
    • Declining Brand Loyalty
    • Increased Promotional Sensitivity
    • Brand Proliferation
    • Fragmentation of Consumer Markets
    • Short-Term Focus
    • Increased Accountability
    • Competition
    • Clutter
  4. 4. Sales Promotion Uses
    • Introduce new products by encouraging trial and repurchase
    • Get existing customers to buy more
    • Attract new customers
    • Defend current customers
    • Maintain sales in off season
    • Target a specific market segment
    • Enhance IMC efforts and build brand equity (brandcan cheapenif SP is not designed to reinforce the brandpositioning)
    • If advertising spends are reduced to increase Sales Promotions itcan erode brand franchise andimage (commodity / parity product image)
  5. 5. Sales Promotion Vehicles Frequency programs Consumer-Oriented Samples Coupons Premiums Contests/sweepstakes Refunds/rebates Bonus packs Price-off deals Event marketing Trade-Oriented Contests, dealer incentives Trade allowances Point-of-purchase displays Training programs Trade shows Cooperative advertising
  6. 6. Objectives of Consumer-Oriented Sales Promotion
    • To Obtain Trial and Repurchase
    • To Increase Consumption of an Established Brand
    • To Defend (Maintain) Current Customers
    • To Target a Specific Segment
    • Enhance IMC programs and build brand equity
  7. 7. Advantages and Limitations of Coupons
    • Advantages:
    • Appeal to price
    • sensitive consumer
    • Can offer price break
    • without retailers coop
    • Can be effective way
    • to induce trial of new of existing products
    • Can be a way to defend
    • market share and
    • encourage repurchase
    • Disadvantages
    • Difficult to determine how many consumers will use coupons and when
    • Coupons are often used by loyal consumers who may purchase anyway
    • Declining redemption rates and high costs of couponing
    • Misredemption and fraud
  8. 8. Distribution of Coupons
    • Through ads, DM / press / on-pack and also by the scanner to competitive brand users
    • Coupon adsshould -
      • Reinforce the positioning - highlight brand strength and key benefits emphasised in the ad
      • Be convenient to clip, show package prominentlyand have the mandatory legal copy
    • Placedin /on packto build repeat purchase & loyalty
    • Placedon other productsCross-ruff to attract new customers
    • DM couponsare more targeted, have higher redemption
    • Scanner dispensed couponsattract other brand users
    • Cash rebates(on durables) on proof of purchase
  9. 9. Coupon Fraud
    • Consumers redeem without purchase
    • Clerks and staff exchange for cash
    • Managers/owners redeem without sale
    • Criminals collect or counterfeit and sell
  10. 10. Coupon Trends
    • Major companies cutting back on use of coupons
    • Searching for more effective coupontechniques
    • More use of internet for distribution
  11. 11. Sampling
    • Sampling works best when :
    • The products are of relativelylow unit value , so samples dont cost much
    • Thepurchase cycle is relatively shortso the consumer can purchase in a relatively short time period
    • The products aredivisibleand can be broken into small sizes that can reflect the products features and benefits
    • There isenough quantityfor the consumer to try a product, (but keep packaging & mailing expenses down)
    Providing consumer with some quantity of a product for no charge to induce trial
  12. 12. Sampling Methods
    • Door-to-door
    • Direct mail
    • In-store sampling
    • Cross-product sampling
    • With newspaper or magazine
    • Through the internet
      • Sampling is more effective after an introductory set of ads giving a toll free number to call for samples
  13. 13. Premiums
    • Two types of premiums: (in pack / mailed on proof of purchase at no cost)
      • Free premiums -
        • only require purchase of the product
      • Self-liquidating premiums -
      • require consumer to pay some or all of the cost of the premium
    • Reinforces brand image
    • Builds repeat purchase / brand loyalty
    Premium an offer of an item of merchandiseor service either free or at a low cost thatis an extra incentive for customers
  14. 14. Contests and Sweepstakes Contest a promotion where consumers compete for prizes or money on the basis of skills or ability.Winners are determined by judging entries or ascertaining which entry comes closes to some predetermined criteria Sweepstakes/games a promotion where winners are determined purely by chance and cannot require a proof of purchase as a condition for entry. Winners are determinedby random selection from the pool of entries or generationof a number to match those held by game entrants. Can reinforce brands advertising platformif appropriately designed
  15. 15. Other Popular Consumer Sales Promotion Tools
    • Price packs offer lower price than usual or greater quantity than usual
      • Bonus Packs For value enhancing items more quantity packs are better than price-offs promotions
      • Price-off deals - Induces switching and reinforces loyalty
    • Refunds and Rebates
    • Event marketing
    • Frequency/loyalty programs
    • Subsidised financing / Reduced EMI
      • incentive for durables
  16. 16.
    • CFB Promotional Objectives
      • Communicate distinctive brand attributes
      • Develop and reinforce brand identity that is consistent with the image of the brand
      • Build long-term brand preference
      • Encourage repeat purchase and long-term patronage
      • Engage active consumer involvement
    Consumer Franchise-Building (CFB) Promotions Consumer Franchise Building Promotions Communicate distinctive brand attributes and contribute to the development and reinforcement of brand identity and image
  17. 17. Nonfranchise-Building (non-FB) Promotions
    • Non-FB Promotions May Include
      • Price-off deals
      • Bonus packs
      • Rebates or refunds
    • Non-FB Promotions shortcomings
      • Trade promotions benefits maynotreach customers
      • Customers may buy on the basis of price rather than brand equity
      • Do not encourage the development of brand loyalty
    Nonfranchise-building promotions - Accelerate the purchase decision process and generate an immediate sales increase but do not contribute to the building of brand identify and image
  18. 18. Trade-Oriented Sales Promotion Objectives
    • Obtain Distribution of New Products
    • Maintain Trade Support for Existing Products
    • Encourage Retailers to Display and Promote Existing Brand
    • Build Retail Inventories
        • Stock and buy more stocks
        • Move goods from warehouse to shelf
    • Can erode brand franchise & image if advertising spends are reduced (commodity / parity product image) or is not brand enhancing
  19. 19. Types of Trade-Oriented Promotions
    • Contests and Incentives
    • Trade Allowances
      • Buying Allowances
      • Promotional Allowances
      • Slotting Allowances
    • Point-of-Purchase Displays
    • Sales Training Programs
    • Trade Shows
    • Cooperative Advertising
  20. 20. Trade Allowances
    • Off-invoice / buying allowance
    • Count-recount allowances
    • Billback allowances
    • Display allowances in-ad grocer coupon
    • Slotting and facing allowances
    • Trade inventory financing and delayed billing
    • Sweepstakes, contests, etc for retail sales people
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