Slide 1:PERSONALSELLING ADVERTISING PUBLICITY SALESPROMOTION Sales Promotion


Sales Promotion Importance :Sales Promotion Importance Growth in United States Exceeds $250 billion dollars a year Increasing percentage of promotional dollars Consumer goods companies spend more on sales promotions than advertising


Sales Promotion :Sales Promotion Objective: Bolster/complement other promotional mix elements during a specific time period Targeted toward: Sales force Wholesalers and retailers Consumers Definition: any activity or material used as a direct inducement to purchase


Sales Promotion Methods for Consumers :Contests, games & sweepstakes Product sampling, demonstrations Sales Promotion Methods for Consumers


Sales Promotion Methods for Consumers :Multiple purchase offers, Frequent-user incentives Sales Promotion Methods for Consumers


Classifying Types of Sales Promotion :Classifying Types of Sales Promotion Promotional pricing Non-price promotions Sampling Price reductions Free goods Tied offers Money off next purchase Loss leader pricing Cheap credit Contests Free gifts Self-supporting offers Multi-brand promos s Guarantees and added services Most effective in the early stages of a new product launch (#1 use for coupons) Important for food products Very expensive


Rebates: A Consumer Information Source :Rebates: A Consumer Information Source Buyers fill out rebate forms with names, addresses and household data about customers - directly targets price cuts to customers - 5-10% are redeemed (A Phantom discount) Pepsi offers a $5 rebate on the Home Alone video


Slide 8:Rebates are often effective at changing purchase probabilities, even for big-ticket items


Slide 9:Coupons, too, can be effective at getting consumers to purchase specific products


Number of Coupons Redeemed Per (International) Household in 1992 :Number of Coupons Redeemed Per (International) Household in 1992


USA Coupon Redemption :USA Coupon Redemption 1990 1992 1993 1994 1995 Distribution 279 310 300 310 292 Redeemed 7.1% 7.7 6.8 6.2 5.8%


Slide 12:Snapple ‘Yard Sale’ Refreshes Sales Drive Source: Direct Mktg News, 2004 “The idea is about brand loyalty, getting more people to buy bottles, collect caps and buy stuff at the Snappleton yard sale, an online town on Snapple.com” Ms. Bernstein, Senior V.P. Involvement: Collecting bottle caps. Silver cap (16 oz.)- ice tea products Yellow caps (Lemonade products) White caps (20-32 oz. bottles.)


Snappleton ‘Yard Sale’ :Snappleton ‘Yard Sale’ Unique merchandise like Quicksilver apparel, Lite-Bright, Nintendo Game Boy Advance and Piaggio Scooter. “Snapple operates off a really low budget , doing more with less.” Objectives: Increase users aged -15 to 24. Use the internet to pique curiosity in a competitive U.S. beverage market, (Coca-Cola Co. and Pepsi Co.)


Sales Promotion Methods for the Trade :Sales Promotion Methods for the Trade Trade shows Contests, free merchandise Display equipment, P-O-P materials Cooperative advertising & promotions Vertical - channel members Horizontal - group of retailers Allowances (buying vol., buy-back, scan-back, merchandise) Premium or push money, slotting allowances


Trade Shows :Trade Shows Maintain relationship Transmit messages to key accounts Remedy problems Add-on sales Selling objectives Non-selling objectives Current customers Potential customers Maintain image Test products Gather competitive intelligence Widen exposure Contact prospects Determine needs Transmit messages Commit to call back or sale Contact prospects Foster image building Test products Gather competitive intelligence


Proportion of Promotional Expenditures :Proportion of Promotional Expenditures Trade sales promotion Consumer sales promotion Advertising


Sales Promotion, Pro and Con :Sales Promotion, Pro and Con Advantages: Motivation method for special efforts Short-term sales increase Defined target audience Defined role/objectives Indirect roles (e.g., wider distribution) Disadvantages: Only short-term Hidden costs Confusion Price cutting -Brand image Postponement effect Significant government regulation Lack of effectiveness sometimes (learning effect)


A Benefit Congruency Framework of Sales Promotion Effectiveness :A Benefit Congruency Framework of Sales Promotion Effectiveness JrlMktg,Oct.2000 Are monetary savings the only explanation for consumer response to sales promotions? If not, how do the different consumer benefits of sales promotion influence its effectiveness? Savings Quality Convenience Value expression Exploration Entertainment Six Benefits


Sales Promotions Benefit Matrix :Sales Promotions Benefit Matrix Low Low High High Utilitarian Hedonic Free Gifts Positioning Map


Design and Procedure :Design and Procedure


Conclusions :Conclusions 1. Monetary saving is not the only consumer benefit 2. Consumers distinguish six benefits Six benefits grouped between Utilitarian and Hedonic All six (except quality) are significant predictors of overall evaluation 5. Monetary promos provide more Utilitarian benefits than Hedonic benefits


Benefit Congruency EffectDesign and Procedure :Benefit Congruency EffectDesign and Procedure


Conclusions :Conclusions 1.Sales promo’s provide benefits beyond monetary savings 2.Nonmonetary promos provide more Hedonic benefits 3.For High End brands, sales promos are more effective 4.Monetary promos can destroy market share when offered with incongruent high equity hedonic brands competing against low-priced brands Proof of congruency between needs of products and monetary promotions Negative effects of some promotion were due to lack of relevance Discussion of Studies 4 and 5


Role of The Promotion Mix :Role of The Promotion Mix Promotion is an organization’s unique set of communications (stimuli) designed to influence (inform, persuade & remind) selected target audiences into desirable responses. Who says what to whom, in what setting , by which channels, with what purposes. Promotion facilitates (efficient) exchange