Chapter 8 Sales Promotion

1. Chapter 8Sales Promotion ©2005 Pearson Education Canada Inc.

2. Sales Promotion “Activity that provides special incentives to encourage immediate response from customers, distributors, and an organization’s sales force.” Incentives to stimulate purchase or loyalty. Consumer Promotion Incentives to encourage purchase and merchandising support by distributors. Trade Promotion ©2005 Pearson Education Canada Inc.

3. Push and Pull Strategies Pull Marketer Wholesaler Retailer Consumer Push A combination of push and pull works best! ©2005 Pearson Education Canada Inc.

4. 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 ©2005 Pearson Education Canada Inc.

5. Sales Promotion Plans Marketing Plan Other IMC Plans Sales Promotion Plan Objectives Strategies Tactics Advertising Strategy Fulfillment Evaluation ©2005 Pearson Education Canada Inc.

6. Sales Promotion Objectives • Trial Purchase • Repeat Purchases • Brand Loyalty Consumer Promotion • Listings • Sales Increases • Merchandising Support Trade Promotion ©2005 Pearson Education Canada Inc.

7. 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. ©2005 Pearson Education Canada Inc.

8. Logistics and Fulfillment • Involves decisions about dates, deadlines, and details. • A promotion must run seamlessly from the front-end (announcing the promotion) to the back-end (delivering prizes or merchandise to recipients). • Fulfillment is often outsourced to a specialist. ©2005 Pearson Education Canada Inc.

9. 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 ©2005 Pearson Education Canada Inc.

10. Consumer Promotion Execution Coupons • Media delivery • Product delivery • In-store delivery • Cross-product delivery A price-saving incentive to trigger new or repeat purchases. ©2005 Pearson Education Canada Inc.

11. Consumer Promotion Execution • Regular size • Trial size • In-store taste samples • On-site giveaway Free Samples Free product to encourage trial purchase. ©2005 Pearson Education Canada Inc.

12. Consumer Promotion Execution Contests • Sweepstakes • Games Contests • Instant Wins Repeat purchase and loyalty-building incentives. They require advertising support to create interest. ©2005 Pearson Education Canada Inc.

13. Consumer Promotion Execution Cash Rebates • Single Purchase Offers • Multiple Purchase Offers • Slippage Occurs $ returned to consumers after purchase has been made. ©2005 Pearson Education Canada Inc.

14. Consumer Promotion Execution • In-pack • Mail-in • With purchase • Product bundling • Bonus packs Premium Offer An item given free or at a discounted price with the purchase of a good. ©2005 Pearson Education Canada Inc.

15. Consumer Promotion Execution • Points programs • Loyalty cards • $ rewards Loyalty Programs Incentives that encourage long-term loyalty; database management initiatives. ©2005 Pearson Education Canada Inc.

16. 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. ©2005 Pearson Education Canada Inc.

17. Trade Promotion Execution A variety of financial incentives are commonly offered to distributors. Trade Allowance Temporary price reduction to stimulate larger purchases. An additional allowance to encourage merchandising support. Performance Allowance An accumulating fund that supports retail advertising. Cooperative Advertising ©2005 Pearson Education Canada Inc.

18. Trade Promotion Execution Some trade promotion incentives are controversial. An incentive offered a distributor to encourage a “special” purchase. Often called “payola.” Dealer Premium Retail representatives are offered incentives to “push” a sponsors product line. Spiff ©2005 Pearson Education Canada Inc.

19. Trade Promotion Execution Some trade promotions support the personal selling effort and in-store merchandising programs. Material used by sales reps in presentations (price lists, catalogues, brochures, CD-ROMs, etc.). Collateral Matrial Point-of-purchase display material to encourage purchase (shelf pads, posters, displays, etc.). Dealer Display Material ©2005 Pearson Education Canada Inc.

20. Planning the Promotion Planning is crucial. Sales promotions are complimentary activities that must be integrated with other marketing and marketing communications programs. • How frequent should promotions be? • What effect will promotions have on brand image? • Will promotions enhance brand equity? Tim Hortons RRRoll Up the Rim meets all of these considerations positively. ©2005 Pearson Education Canada Inc.