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Sales Promotion…

Sales Promotion…. Is an incentive to get customers, channel members, or the sales force to take some action (like buying) Has 2 basic types Price reduction effect (e.g. rebates, coupons) Incentive based on something other than price (e.g. a contest) Clow and Baack -- 2 basic types

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Sales Promotion…

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  1. Sales Promotion… • Is an incentive to get customers, channel members, or the sales force to take some action (like buying) • Has 2 basic types • Price reduction effect (e.g. rebates, coupons) • Incentive based on something other than price(e.g. a contest) • Clow and Baack -- 2 basic types • Franchise Building • Sales Building • Always conveys one or more messages, intended or unintended

  2. Purposes of Trade Oriented Sales Promotion • New product distribution • Maintain trade support and market share for established products • Get shelf space • Get display and other kinds of promotional support • Build channel inventories • Build order size • Build channel relationships

  3. Trade Promotion Tools • Trade allowances – incentive for purchasing • Trade contests • Trade incentives – incentive for performing a function • Training programs • Vendor support programs – reimbursement to channel members e.g. for advertising • Trade shows • Specialty advertising • Point of purchase advertising – special merchandise displays

  4. Drawbacks and Disadvantages of Trade Promotions • Costs • Impact on small manufacturers • Over-reliance to move merchandise • Erosion of brand image Specific to Trade Allowances • Failing to pass along savings to consumers • Forward buying • Diversion

  5. Good Times or Reasons to use Sales Promotion • When price promotion is consistent with brand image or positioning • When introducing a new product • When trying to move inventory, or trying to get the most out of a bad idea (e.g. a clothing line that didn’t work out) • In maturity – competing on price • But be careful what message is conveyed

  6. Sales Promotion is good for… • Getting attention • Getting liking (maybe) • Getting cognitive involvement (contests & sweepstakes) • Getting trial • Getting purchase • But again, be careful what message is conveyed

  7. Types • Coupons • Premiums • Contests & sweepstakes • Refunds & rebates • Sampling • Bonus packs • Price-offs • Combinations of the above

  8. Coupons • FSIs – most common • Avg. redemption rate – about 2%, but >20% for Internet coupons • Brand-loyal customers redeem about 80% of coupons: both bad and good • Illegal redemption • Use couponing to reinforce brand already in evoked set

  9. Other Types, some detail • Premiums • Use premiums with perceived value • Premium should relate to the product or at least to the audience • Problems: time and cost • Contests and Sweepstakes • More engaging – but tie to decision process and hierarchy of effects • Use both extrinsic and intrinsic value • Problems: cost, indifference, clutter

  10. More types and detail • Refunds and rebates • Problems: costs, expectations, time-to-reinforcement • Sampling • Introduce a new product • Problems: costs, effective distribution

  11. Even more types and detail • Bonus Packs • Can get brand switching • Tough to figure right amount of give away • Price-offs • Message? • Business-to-business • Few FSIs • More emphasis on premiums, contests/sweepstakes, sampling, and bonus packs

  12. Key Aspects of Sales Promotion to Keep in Mind • It’s an extra incentive • It’s a sales accelerator, often • Often the channel is the target • It can be consumer oriented, trade oriented, or aimed at business customers

  13. Use of Sales Promotion has grown due to… • Power of retailers • Lower brand loyalty • More sensitivity to promotion • More brands • Fragmented consumer market • Short term view • More accountability • Competition • Clutter in advertising

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