Sales Promotion

1. Sales Promotion

2. An ExtraIncentive to Buy A Tool to Speed up Sales Targeted to Different Parties Sales Promotion “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.” An ExtraIncentive to Buy A Tool to Speed up Sales

3. Types of Sales Promotion Activities Consumer-Oriented Trade-Oriented Samples Samples Contests, Dealer Incentives Contests, Dealer Incentives Trade Allowances Trade Allowances Coupons Coupons Point-of-purchase Displays Point-of-purchase Displays Premiums Premiums Contests/sweepstakes Contests/sweepstakes Training Programs Training Programs Refunds/rebates Refunds/rebates Trade Shows Trade Shows Cooperative Advertising Bonus Packs Bonus Packs Price-off Deals Price-off Deals Frequency Programs Frequency Programs Event Marketing Event Marketing

4. Consumer Promotions Media Advertising Trade Promotions Growth of Sales Promotion 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% '89 ‘90 ‘91 ‘92 '93 '94 '95 '96 '97 '98 '99 ‘00 Percent of Total Promotional Dollars, 3-year Moving Average.

5. Reasons for the Growth of Sales Promotion Reasons Reaching a Specific Target Audience Strategic Importance of Sales Promotion Growing Power of Retailers Declining Brand Loyalty Increased Promotional Sensitivity Brand Proliferation Fragmentation of the Consumer Market Short-Term Focus Increased Accountability Competition Clutter

6. Objectives of Consumer Sales Promotion To Increase Consumption of an Established Brand Objectives To Obtain Trial and Purchase To Defend (Maintain) Current Customers To Enhance IMC Efforts and Build Brand Equity

7. Consumer Sales Promotion Strategy Decisions • Three categories of strategic decisions for sales promotion: • Strategic tools/options • Application across product lines • Application in geographic markets

8. Communicate Distinctive Brand Attributes “Frequency” Programs Encourage Repeat Purchase Build Long-term Brand Preference May Improve One-on-one Communications 1. Strategic Tools/Options Franchise Building Promotional Objectives Communicate Distinctive Brand Attributes Develop and Reinforce Brand Identity Develop and Reinforce Brand Identity Build Long-term Brand Preference Franchise Building Techniques and Practices “Frequency” Programs Encourage Repeat Purchase “Frequency” Programs Encourage Patronage Loyalty “Frequency” Programs Encourage Patronage Loyalty

9. WD-40 Brand Building Sweepstakes

10. 1. Strategic Tools/Options Figure 13-2

11. 2. Application Across Product Lines • Across the entire line or on individual items? • If individual items, which ones? • More or less popular? • Higher or lower price points? • Regular stock or special version?

12. 3. Application Across Geographic Markets • Sales promotion  Nationally or in select markets.

13. Consumer Sales Promotion Tactical Decisions Timing Execution Value of Incentive Distribution

14. 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 Purchase Cycle Is Relatively Short So the Consumer Can Purchase in a Relatively Short Time Period Sampling Sampling Works Best When 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

15. Strengths and Limitations of Sampling Strengths Limitations Induce prospective buyer to try product or service Induce prospective buyer to try product or service Brand must have unique benefit to induce repeat purchases Brand must have unique benefit to induce repeat purchases Greater consumer appreciation of product benefits Greater consumer appreciation of product benefits Learning period required to appreciate brand requires large sample size

16. Door-to-door Sampling Sampling through Media Sampling through Mail In-store Sampling On-product Sampling Event Sampling Direct Sampling Location Sampling The Internet Sampling Methods Door-to-door Sampling Methods Sampling through Media Sampling through Mail In-store Sampling On-product Sampling Event Sampling Direct Sampling Location Sampling

17. Armor All Uses an On-Package Sample

18. Canadians use about 8 coupons per person 85% of Canadians used coupons last year Over half of all Canadian households claim coupons influence their brand purchase decisions 1/3 of all Canadians used coupons in the past week in 2003 Coupons Coupons

19. Strengths and Limitations of Coupons Strengths Limitations Appeal to Price Sensitive Consumer Difficult to Determine How Many Consumers Will Use Coupons and When Difficult to Determine How Many Consumers Will Use Coupons and When Appeal to Price Sensitive Consumer Can Offer Price Break Without Retailers Coop Can Offer Price Break Without Retailers Coop Coupons Are Often Used by Loyal Consumers Who May Purchase Anyway Coupons Are Often Used by Loyal Consumers Who May Purchase Anyway Declining Redemption Rates and High Costs of Couponing Declining Redemption Rates and High Costs of Couponing Can Be Effective Way to Induce Trial of New or Existing Products Can Be Effective Way to Induce Trial of New or Existing Products Improper Redemption and Fraud Can Be Way to Defend Market Share and Encourage Repurchase Can Be Way to Defend Market Share and Encourage Repurchase

20. Coupon Distribution Across All Media (2003) Data from Figure 13-7

21. Valpak’s Advertising Helps Enhance the Value of Coupons

22. Coupons Are Now Available Online

23. Two Types of Premiums Free Premiums: Only Require Purchase of the Product Self-liquidating Premiums: Require Consumer to Pay Some or All of the Cost of the Premium Premiums Premium: an offer of an item of merchandise or service either free or at a low cost that is an extra incentive for customers Free Premiums: Only Require Purchase of the Product

24. 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 chosen by random selection from a pool of entries or generation of a number to match those held by game entrants.

25. Refunds and Rebates Refunds: Offers by the manufacturer to return a portion of the product purchase price, usually after the consumer supplies some proof of purchase.

26. Strengths and Limitations of Refunds and Rebates Strengths Limitations Create New Users Create New Users Delay in Obtaining Refund Delay in Obtaining Refund Brand Switching or Repeat Purchases Brand Switching or Repeat Purchases Effort to Obtain Refund Effort to Obtain Refund Image of Refunds/Rebates Temporary Price Reduction Temporary Price Reduction Slippage Slippage

27. Other Sales Promotion Tools Bonus Packs OtherPromotional Tools Price-off Deals Event Marketing Frequency/Loyalty Programs

28. Gerber Developed a Sweepstakes in Conjunction with a Loyalty Program

29. Bonus Packs • Extra amount of product at regular price by providing larger containers or extra units.

30. Obtain Distribution of New Products Maintain Trade Support for Existing Products Build Retail Inventories Encourage Retailers to Display Existing Brands Objectives of Trade Sales Promotion Obtain Distribution of New Products Maintain Trade Support for Existing Products Objectives Encourage Retailers to Display Existing Brands

31. Buying Allowances Promotional Allowances Slotting Allowances Trade Sales Promotion Strategy Options Contests and Incentives Events Trade Allowances Point-of-Purchase Displays Sales Training Programs Trade Shows Cooperative Advertising

32. Chicken of the Sea Targets the Trade with this Collateral Piece

33. The Sales Promotion Trap Figure 13-10