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Promotional Mix Strategies

Promotional Mix Strategies. Push versus Pull and More. Sales Promotion:. How will they become aware of your promotion? Where will the incentive and the message be delivered? When? In store vs. Sales call? Trade vs. Consumer? Best method of distribution?

Mercy
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Promotional Mix Strategies

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  1. Promotional Mix Strategies Push versus Pull and More

  2. Sales Promotion: • How will they become aware of your promotion? • Where will the incentive and the message be delivered? • When? In store vs. Sales call? Trade vs. Consumer? Best method of distribution? • FSI? Seminar? Direct Mail? Trade magazine? • Sales Call? Media? Home or store delivery? • On-Pack? In-Pack? Shelf pad? Handout? • Kiosk? Electronic on Cart? Co-Op/In Ad? Bounce back?

  3. Sales Promotion: Objectives: • New Product Introduction • Incremental Volume or Repeat Purchase • Reinforce Brand Image • Retail Support • Segment/target Audience • Brand Switching • In-store/Impulse Purchase • Building Customer Database

  4. Sales Promotion: • In 2005 marketers distributed more than $318 Billion in coupons worth $1083. per person in U.S.

  5. “Last Mile” and “Key Moments of Truth” • Attention to consumers at or near the point of purchase -- in "the last mile" of decision-making, according to current jargon. • OgilvyAction says most consumer decisions are made "near or in the store," and that the new shop "plans to reach consumers at key moments of truth."  MediaPost 1/8/2007

  6. Hershey Defends Its Marketing Strategy Despite Tough 3rd Quarter, Will Still Emphasize In-Store • Wall Street be damned, Hershey sticking by its theory that in-store marketing and promotion works better than advertising. • Closer to the point of consumption • Despite a slew of questions from analysts suggesting a link between decrease in ad spending and its lower-than-expected sales, Hershey President-CEO Rick Lenny was adamant that Hershey's increase in consumer marketing next year will happen "closest to the point of consumption." • Translation: in store. AdAge: October 19, 2006

  7. Sales Promotion: • Maximizing promotional effectiveness requires sales promotion planning: • to get the right offer • to the right target or consumer • at the right time • at the lowest cost • At the right place – POP, magazine, newspaper, ROP, FSI, supplement, door hangers, mail, polybags, shelf dispenser / talker, electronic kiosk, on-pack, in-pack, in-store, on-cart, coupon, bounceback, internet, electronic checkout • With the right trade support

  8. Sales Promotion: • To gain trial among nonusers of a brand/service. • To increase repeat purchase and/or multiple purchases. • To expand brand usage by suggesting new uses. • To defend share against competition. • To support advertising campaign, theme, image. • To increase distribution and/or dealer, retailer cooperation. • Short-term vs. long-term goals and relationships.

  9. Sales Promotion: • Creating an immediate sale is the primary objective. • Extra incentives to enhance movement and sales. Helps the selling process. • Direct inducement that offers an extra value or incentive to sales force, distributors or the ultimate consumer. • Stimulates Dealer and Channel Involvement.

  10. Sales Promotion: • Increasingly, the gimmicks are going away. More scanning data. • Step up to the challenge of real, brand building value, the kind that sparks genuine consumer and retailer interest. • Contribute to marketing goals. • More Events and Product Licensing

  11. Influences • Push Strategy calls for using the sales force and trade promotion. • Pull Strategy calls for spending on advertising and sales promotion to build consumer demand.

  12. Push Strategy: • Persuade wholesalers and retailers to carry brands. • Give a brand shelf space. • Promote a brand in coop advertising. Producer Wholesaler Retailer Customer

  13. Push Strategy: • Be careful of those big displays at the end of the aisles. • End Aisle Displays. End Caps. • Look at the prices. Only about 40% is actually on sale. • Because they are so bright, big and visual, we feel it’s on sale. Producer Wholesaler Retailer Customer

  14. Push Strategy: • Upping the stakes on in-store marketing: U.S. marketers will spend $19.3 billion on point-of-purchase advertising. • Using focus groups, sales data and econometric analysis to learn what works and what doesn't when it comes to in-store promotions.   Wall Street Journal 3/21/06

  15. Pull Strategy: • Entice customers to try a new product. • Lure customers from competitive products. • Hold and reward loyal customers. Producer Wholesaler Retailer Customer

  16. Push Tools: • Deals- Allowances, Price-offs and Discounts • Displays and Point of Purchase • Dealer Premiums • Samples and Free Goods • Buy-Back Guarantees • Cooperative Advertising • Advertising Materials • Push Money (Spiffs) • Dealer Meetings and Contests • Specialty Advertising Items

  17. Pull Tools: • Sampling---in-store, events, newspaper, in-pack • Cents Off Promotions and Coupons (-2%) • Continuity/Frequency and Loyalty Programs • Premiums • SLO (Self-Liquidating Offers/Premiums) • Point of Purchase Displays • Contests, Games and Sweepstakes • Rebates and Cash refunds • FSI’s (Free-Standing Inserts) 80% of distribution • Advertising Specialty Items

  18. Continuity/Frequency and Loyalty Programs • What happens to the loyalty when the loyalty program stops? • Loyalty cards in your wallet? • Represent an emotional tie to your brand? • Likely they simply represent a discount coupon. • Loyalty is an elusive thing. It's not about saving money, or belonging to an exclusive group as much as it's about faith that a promise will be consistently delivered. Loyalty programs can measure behavior, but not necessarily create equity for a brand in the heart of the consumer.

  19. Hints and Comments: • Coupons getting clipped. Growing retailer power and new accounting rules make couponing lessattractive. 2002 Package-Goods Marketing Budgets • 24%: Advertising 15%: Coupons and Customer Promotion +61%: Retail-Trade Promotion 100% • 1997: 23% Advertising (same) 24% Coupons/Cust. Promotion 53% Retail-Trade Promotion

  20. Hints and Comments: • 850 FSI’s (free standing inserts) per person in ’04. • 251 BILLION coupons. FSI’s are the vehicle in distributing the majority of coupons. Total pages increased 5.9 percent in ’05. • Average coupon face values grew 6.7%, to $1.09. • Offer duration increased to 10.6 weeks. • Now more Household, and Heath & Beauty aids

  21. Hints and Comments: • In 2005, the average face value of Free Standing Inserts (FSI’s) hit $1.03, in comparison to $.95 in 2003, representing an 8.1% increase. In 2004 face value reached $1.00 mark for the first time. • We are seeing more manufacturers present greater incentives to shoppers, whether on a face value or per-unit basis. • “Marketers continue to validate that FSI’s are a great tool to build awareness and gain trial.” Marx Promotion Intelligence ‘04 FSI Trends

  22. Hints and Comments: • In-ad coupons accounted for 8.5% of all coupons distributed. • Average expiration date was three months. FSI’s were 2.6 months • The average redemption rate for in-ad coupons was 0.09% in 2004.

  23. Hints and Comments: • Coupons can be delivered with a full page of advertising. i.e., Restaurants • Coupons on new items but also on products that have plateaued. To keep prices low and keep products on shelf. • $30 savings for a diabetic testing kit or 25 cents off flour. • Demographics: 43% men; 32% live with income of $40-75K.

  24. Hints and Comments: • Coupon experts inspire more use.Coupon savvy shoppers are advising other consumers to learn sale cycles and buy items on sale to save the most money. Although coupon fraud exists, manufacturers offer coupons to entice trying a new product or switch brands. • Big increases: Vitamins, Rug and Room Deodorizers; Prepared and Frozen Foods; Hair Care; Cereals. Decreases in Household cleaning products.

  25. Hints and Comments: • Walgreens and 15 top package-goods marketers are rolling out a RFID (Radio Frequency IDentification) system to electronically track when, how long, and where promotional displays are placed in the chain’s 5,000+ stores. 1/06

  26. Hints and Comments: • Growing importance of shopper marketing • Tilts balance of power even more toward retailers, being the distribution channel. • Own fastest-growing advertising medium for their suppliers too.

  27. Hints and Comments: • Slotting Allowances: The fees retailers collect from manufacturers to ensure shelf space for new products make the marketplace more efficient, a Yale/Cornell study found. • "We find that when retailers perceive that a product is likely to be a sure hit, they don't seem to ask for slotting allowances ... manufacturers don't offer slotting allowances when they perceive the product to be a sure dud.” Progressive Grocer (4/05)

  28. Hints and Comments: • Ever wonder why so much stuff on the Internet is free? • How do sites make money by giving away their products? • Traditional Gillette "give away the razors, sell the blades" model. • In the online age, these tried-and-true giveaway strategies are taken far beyond simply exchanging cash for services and goods. Wired 4/08

  29. Questions: • Are distributing drug samples to doctors a push or a pull strategy? • Incentives from HBO to hotels and motels. Push or Pull? • Beer.com produced 50K bottle caps featuring its name and left them on bars during spring and winter breaks. Push or Pull?

  30. Question: Wal-Mart TV network (in store) • 42” plasma screens • A smart buy or a goodwill, defensive gesture? • Sets are silent. • In-store advertising system. • In fall ’06, $247K, 129 million impressions and CPM: $2.28 includes three :30’s, and five :10’s, every two hours. AdvAge 9/06

  31. Hints and Comments: • Wal-Mart Touts In-Store TV Research claims advertising on its in-store marketing network, with Premier Retail Networks, is more efficient than Cable and Network TV advertising in generating sales. A survey of TV watchers conducted by the TNS Media & Entertainment Group found that 15% of viewers purchased advertised products immediately after seeing them on an in-store broadcast. MediaPost Communications 11/30/05

  32. Hints and Comments: • Affecting more markets. Ford dealer cuts will go deeper. Falling market share will mean more than 18 metro markets are targeted. Ford Motor company to consolidate dealerships. Smaller market share means fewer dealers. Lower costs.WSJ 10/23/2006

  33. Summary: • Sales promotion budgets are usually divided into three categories: 1. Consumer advertising 2. Consumer promotion 3. Trade promotion • Companies in same industry can put emphasis on Push or Pull.

  34. Summary: • Push strategy is appropriate with low brand awareness in a category and brand choice is made in store. Can be an impulse purchase and product benefits are understood. • Pull strategy works best with high brand awareness and loyalty, or high involvement in category and customers look for product differences.

  35. Summary: "Consumers are more participative and selective and the trend from push to pull is accelerating." A.G. Lafley, Procter & Gamble CEO, keynote speaker at the Association of National Advertisers (ANA) ‘06.

  36. Summary: Product Categories: Different Input For • Beverages • Dry Grocery • Frozen • Packaged Deli • Apparel • Entertainment • General Merchandise • Household • Personal Care

  37. Promotional Mix Strategies Push versus Pull and More

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