Sales Promotion

1. Lesson 14 Internatinoal Marketing Decisions: Sales Promotion, Personal Selling, Special Forms of Marketing Communication

2. Sales Promotion • Sales promotion refers to any paid consumer or trade communication program of limited duration usually aimed at stimulating sales / trials • Price (rebates, discounts, coupons) vs. non-price promotions (sampling, premiums, sweepstakes, contests, etc.) • Consumer vs. trade promotions (increase availability in channel)

3. Sales Promotion • Provide a tangible incentive to buyers (lower prices, etc.) • Reduce the perceived risk associated with purchasing a product (sampling) • Provide accountability for communications activity (results can be tracked) • Provide method of collecting additional data for database (forms to be filled in)

4. Sales Promotion: Global or Local • In countries with low levels of economic development, low incomes limit the range of promotional tools available • Free samples, demonstrations • Market maturity can also be different from country to country • Coupons and sampling in growing markets • Trade allowances and loyalty programs in mature markets

5. Sales Promotion: Global or Local • Local perceptions of a particular promotional tool or program can vary • Coupon usage not popular in India • Local regulations may rule out use of a particular promotion in certain countries • Trade structure in the retailing industry can affect the use of sales promotions • Consolidated retail structures require more trade promotions (USA, Europe) • Fragmented retail structures (India) require less trade promotions

6. Sampling • Sampling • Provides consumer with opportunity to try product at no cost • May be distributed in stores, in the mail, through print media, at events, or door-to-door • Point-of-use sampling (Starbucks’ chill patrols; Mylanta introduction in India) • Point-of-dirt sampling (Unilever’s Lever 2000 hand wipes in food courts and petting zoos)

7. Couponing • Couponing • Printed certificates entitle the bearer to a price reduction or some other special consideration for purchasing a particular product • Couponing accounts for 70% of consumer promotion spending in the US • Free standing inserts, on-pack coupons, in-pack coupons, cross coupons)

8. Couponing • Stimulate trial by non-users • Operant conditioning of users (Kroger’s 20 cents a gallon price off on gas) • Not widely used in Asia since using a coupon is considered a sign of cheapness

9. Couponing

10. Sales Promotion: Issues and Problems • Consumer fraud • Pepsi promotion with Apple • Regulations vary by country • Europe regulates promotions heavily • Cultural dispositions to coupons and other sales promotions • Malaysia, India see coupon usage as embarrassing • Islam frowns on gambling so sweepstakes may not work

11. Personal Selling • Person-to-person communication between a company representative and potential buyers • Focus is to inform and persuade prospect • Short-term goal: make a sale • Long-term goal: build relationship • Buyer and seller may come from different cultural backgrounds

12. Personal Selling • Useful when countries regulate media heavily • Japan – comparative advertising is difficult hence product comparisons can be made on a face to face basis • Low wage countries – cheaper to build a sales force • Issue: host country nationals or expats?

13. Sales Force Nationality • Expatriates • Host country • Third country • Other options

14. Expatriates • Advantages • Superior product knowledge • Demonstrated commitment to service standards • Train for promotion • Greater HQ control • Disadvantages • Higher cost • Higher turnover • Cost for language and cross-cultural training Return

15. Host Country • Advantages • Economical • Superior market knowledge • Language skills • Superior cultural knowledge • Implementation quicker • Disadvantages • Needs product training • May be held in low esteem • Language skills may not be important • Difficult to ensure loyalty Return

16. Third Country • Advantages • Cultural sensitivity • Language skills • Economical • Allows regional sales coverage • Disadvantages • May face identity problems • May be blocked for promotions • Needs product and/or company training • Loyalty not assured Return

17. Special Forms of Marketing Communications • Direct Marketing • Direct mail • Catalogs • Infomercials, Teleshopping • Event Sponsorship • Concerts, sporting events • Product placement in movies • Internet Communications

18. Direct Marketing • Any communication with a consumer or business recipient that is designed to generate a response in the form of: • An order • Request for further information • A visit to a store or other place of business

19. Direct Marketing vs. Mass Marketing

20. One-to-One Marketing • Building from Customer Relationship Management • Identify customers and accumulate detailed information about them • Differentiate customers and rank them in terms of their value to the company • Interact with customers and develop more cost efficient and effective forms of interaction • Customize the product/service offered to the customer

21. Catalogs • A magazine style publication that features photographs and extensive information about a company’s products

22. Product Placements • Movies, TV programs, books, etc. • Low attributions hence low skepticism • Circumvent zipping and zapping • Realistic slice-of-life placement • Ethically-charged products • Fit of the brand with the placement segment and its effect on recall and attitudes • Risk of the product being shown in an unfavorable light • Joint promotions between the movie and the product • Too many placements in a program